What GL impact occurs from Cash Sale Refunds?

In the context of cash sale refunds, the correct choice demonstrates how the accounting records reflect the reversal of income and the return of funds to the customer. When a cash sale is refunded, the business is effectively reducing its sales income since the transaction that generated that income is now being undone. Therefore, the sales income account is debited to decrease it.

Simultaneously, the business needs to acknowledge that it is returning funds to the customer. This is typically recorded by crediting either the checking account or undeposited funds, depending on how the payment was initially recorded and how the refund is processed. If the refund is issued directly from the business's checking account, then the checking account is credited. If the refund is processed through undeposited funds, that account would be credited instead.

This process ensures that the accounting records accurately reflect the financial position of the business, maintaining the integrity of the income statement and balance sheet by properly tracking income and cash movements.