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The Sales Returns and Allowances account and the Sales Discounts account are both classified as expense...

The Sales Returns and Allowances account and the Sales

Discounts account are both classified as expense accounts.

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Sales discounts are also known as cash discounts or early payment discounts. Sales discounts (along with sales returns and allowances) are deducted from gross sales to arrive at the company's net sales. Hence, the general ledger account Sales Discounts is a contra revenue account. Sales discounts are not reported as an expense.

Sales returns and allowances is a contra-revenue account deducted from Sales. It is a sales adjustments account that represents merchandise returns from customers, and deductions to the original selling price when the customer accepts defective products

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