
Exam #2 (CH5-8)
Authored by jennyfer laurent
Business
University
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33 questions
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1.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
A company reports the following amounts at the end of the year: Total sales revenue = $450,000; Cash = $42,000; Sales Discount = $14,000; Accounts Receivable = $26,000; Sales Return = $21,000; Operating Expenses = $75,000; Sales Allowances = $32,000. Compute Net Revenues.
$397,000
$383,000
$436,000
$415,000
Answer explanation
Total Sales Revenue - Sales discount - Sales return - Sales allowances = Net revenues.
Total sales revenue - Contra revenue = Net revenue
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
A sale on account is recorded as a debit to Service Revenue and a credit to Accounts Receivable
True
False
Answer explanation
A sale on account is recorded as a debit to Accounts Receivable and a credit to Service Revenue.
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
The amounts owed to a company by its customers from the sale of goods or services on account is commonly referred to as:
Cash
Accounts Receivable
Revenue
Accounts Payable
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the primary disadvantage of extending credit to customers?
Lower profitability
Reduced operating efficiency
Lower revenues
Delay or failure to collect cash
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
When customers purchase goods on account, Spitz Manufacturing offers them a 2% reduction in the amount owed if they pay within 10 days. This is an example of a:
Bad debt
Sales return
Sales discount
Sales allowance
Answer explanation
Sales discount: to encourage customer to pay earlier than the due date.
Sales allowance: A customer keeps a problem item but receives a cut on price.
6.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
A company reported the following amounts at the end of the year: total sales revenue = $500,000; sales discounts = $10,000; sales allowances = $15,000; net revenues = $440,000. What amount did the company report for sales returns for the year?
$415,000
$25,000
$35,000
$475,000
Answer explanation
Sales returns = Total sales revenue - Net revenues - Sales discounts - Sales allowances.
Sales returns = $500,000 - $440,000 - $10,000 - $15,000
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
A company's adjusting entry for uncollectible accounts at year-end would include a:
Debit to Bad Debt Expense
Debit to Allowance for Uncollectible Accounts
Debit to Accounts Receivable
Credit to Accounts Receivable
Answer explanation
Year-end adjustment: (Allowance method)
Dr. Bad Debt Expense (+E) (-R) (-NI) (-SE)
Cr. Allowance for Uncollectible Accounts
Write off for uncollectible: (Allowance Method)
Dr. Allowance for Uncollectible Accounts
Cr. Accounting Receivable
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