Companies can report credit card expense as a reduction in net sales or as a selling expense.

Credit Card Expense

Expenses incurred through the use of a credit card, including purchases, interest charges, and other fees.

Net Sales

Net Sales are the revenue from the sale of goods or services minus returns, allowances for damaged or missing goods, and discounts.

Selling Expense

Costs incurred directly from the sale of products or services, excluding production costs.

Develop a knowledge of the essential aspects and implications of accounts receivable management and its impact on financial fluidity.
Grasp the accounting treatments for different types of receivables transactions, such as sales with bank credit cards and pledging accounts receivable as loan collateral.

Verified Answer

Tanner HodgesJun 16, 2024

Final Answer :

True

Explanation :

Companies have the option to report credit card expenses either as a reduction in net sales, reflecting the fees as a direct deduction from revenue, or as a selling expense, which would be listed separately on the income statement under operating expenses.

Learning Objectives

Develop a knowledge of the essential aspects and implications of accounts receivable management and its impact on financial fluidity.
Grasp the accounting treatments for different types of receivables transactions, such as sales with bank credit cards and pledging accounts receivable as loan collateral.

Companies can report credit card expense as a reduction in net sales or as a selling expense.

Definitions

Learning Objectives

Learning Objectives

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