Which of the following does not correctly describe the effect of a journal entry involving the recording of a credit card discount?

A) Net sales decrease and net income decreases.
B) Net sales decrease,operating expenses increase,and net income remains the same.
C) Operating expenses remain the same and net income decreases.
D) Net sales decrease and gross profit decreases.

Question

Mercy Chimwamchere · Accepted Answer

Final Answer : B, Explanation :  A credit card discount is a reduction in the amount that a business receives from a customer who pays with a credit card. When a journal entry is made to record this discount, the net sales decrease, but the money received from the customer is still recorded as a cash receipt. Therefore, there is no change in net income. Operating expenses also do not increase as a result of recording a credit card discount. Option B is incorrect because it incorrectly states that operating expenses increase.

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