MBA 510 FINAL EXAM QUESTIONS AND
ANSWERS. VERIFIED 2026.
Revenue recognition principle requires - ANS that revenues be recorded when the company
transfers goods and services to customers
FOB (Free on board) Shipping point, title changes - ANS hands at shipment
FOB destination, title changes - ANS hands on delivery
What does 2/10, n/30 mean? - ANS 2 is the discount percentage
10 is the number of days in the discount period
n is net sales
30 is maximum days in the credit period
Why would a company offer sales discounts? - ANS To encourage customers to pay quickly
How to record a sales discount? - ANS Sales revenue - sales discounts = Net sales
What do sales discounts and sales returns and allowances affect? - ANS The Net sales
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, An account receivable is created by - ANS a credit sale on an open account
A note receivable is a - ANS promise ni writing to pay a specified amount
A trade receivable is created in - ANS the normal course of business when a sale of
merchandise or services on credit occurs
A non-trade receivable arises from - ANS transactions other than the normal sale of
merchandise or services
Allowance method is based on - ANS estimates of the expected amount of bad debts
What accounts does bad debt affect - ANS debit to bad debt expense
credit to allowance for doubtful accounts
Accounts affected by writing of specific uncollectible accounts - ANS debit to allowance for
doubtful accounts
credit to accounts receivable
Does bad debt affect the income statement? - ANS No
What accounts are affected by the recovery of a bad debt - ANS -debit accounts receivable
credit allowance for doubtful accounts
and
-debit cash
credit accounts receivable
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
ANSWERS. VERIFIED 2026.
Revenue recognition principle requires - ANS that revenues be recorded when the company
transfers goods and services to customers
FOB (Free on board) Shipping point, title changes - ANS hands at shipment
FOB destination, title changes - ANS hands on delivery
What does 2/10, n/30 mean? - ANS 2 is the discount percentage
10 is the number of days in the discount period
n is net sales
30 is maximum days in the credit period
Why would a company offer sales discounts? - ANS To encourage customers to pay quickly
How to record a sales discount? - ANS Sales revenue - sales discounts = Net sales
What do sales discounts and sales returns and allowances affect? - ANS The Net sales
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, An account receivable is created by - ANS a credit sale on an open account
A note receivable is a - ANS promise ni writing to pay a specified amount
A trade receivable is created in - ANS the normal course of business when a sale of
merchandise or services on credit occurs
A non-trade receivable arises from - ANS transactions other than the normal sale of
merchandise or services
Allowance method is based on - ANS estimates of the expected amount of bad debts
What accounts does bad debt affect - ANS debit to bad debt expense
credit to allowance for doubtful accounts
Accounts affected by writing of specific uncollectible accounts - ANS debit to allowance for
doubtful accounts
credit to accounts receivable
Does bad debt affect the income statement? - ANS No
What accounts are affected by the recovery of a bad debt - ANS -debit accounts receivable
credit allowance for doubtful accounts
and
-debit cash
credit accounts receivable
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
