Final answer:
Sales Discounts and Sales Returns and Allowances are contra revenue accounts that deduct from gross sales to calculate net sales on the income statement.
Explanation:
Sales Discounts and Sales Returns and Allowances are contra revenue accounts in accounting.
In a multi-step Income Statement, Sales Discounts and Sales Returns and Allowances are presented as deductions from gross sales to arrive at net sales.
Net sales is a critical figure in the income statement as it reflects the actual revenue generated by the business after accounting for discounts and returns.
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