Management 200 Exam 2 Purdue University questions with || || || || || || || ||
verified detailed solutions || ||
Credit sales are recorded as
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A. Debit Cash, credit Deferred Revenue
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B. Debit Service Revenue, credit Accounts Receivable
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C. Debit Cash, credit Service Revenue
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D. Debit Accounts Receivable, credit Service Revenue - ✔✔D. Debit Accounts
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Receivable, credit Service Revenue || || ||
Identify the condition(s) that must exist for a sale and the related receivable to be
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recognized.
A. Collection of cash is probable
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B. The company must have collected cash from at least one previous sale to the
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customer
C. Goods or services have been provided to the customer
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D. Two of the other answers are conditions that must exist - ✔✔D. Two of the other
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answers are conditions that must exist
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A and C
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Which of the following items are classified as receivables
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A. Tax refund claims
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,B. Amounts owed by customers
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C. Amounts loaned and expected to be collected
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D. All of the other answers are classified as receivables - ✔✔D. All of the other
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answers are classified as receivables
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Identify the likely disadvantage(s) of extending credit to customers
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A. Delay or failure to collect cash
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B Lower profitability
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C. Lower Revenues
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D. All of the other answers are disadvantages of extending credit to customers - ✔✔A.
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Delay or failure to collect cash
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The Sales Returns account is an expense account
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A. True
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B. False - ✔✔B. False
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Sales Returns is a contra revenue account
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Which of the following computations would be used to compute Net Revenue?
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A. Total Revenue + Accounts Receivable - Sales Discounts Sales Allowances
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B. Net Revenue + Sales Allowances - Sales Discounts
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C. Total Revenue - Sales Discounts - Sales Allowances
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,D. Net Income - Change in Accounts Receivable - ✔✔C. Total Revenue - Sales
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Discounts - Sales Allowances || || ||
Trade discounts represent a discount offered to the purchasers for a quick payment
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A. True
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B. False - ✔✔B. False
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Trade discounts represent a reduction in the listed price of a product and service
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When customers purchase products on account, Knomark, Inc. offers them a 2%
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reduction in the amount owed if they pay within 10 days. This is an example of a:
|| || || || || || || || || || || || || || || ||
A. Bad debt
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B. Sales Discount
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C. Sales Return
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D. Sales Allowances - ✔✔B. Sales Discount
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When a comany sells a $100 service with a 20% trade discount, $80 of revenue is
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recognized. ||
A. True
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B. False - ✔✔A. True
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A sales allowance is recorded as a debit to Accounts Receivable and a credit to Sales
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Allowances.
, A. True
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B. False - ✔✔B. False
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A sales allowance is recorded as a debit to Sales Allowances and a credit to Accounts
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Receivable.
The net realizable value of accounts receivable is the full amount owed by customers
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A. True
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B. False - ✔✔B. False
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Net realizable value is a net amount of cash we expect to collect.
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LePage's Inc. shipped the wrong color of paint to a customer. The customer agreed to
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keep the paint upon being offered a 15% price reduction. The price
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reduction is an example of a: || || || || ||
A. Sales Revenue
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B. Sales Discount
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C. Sales Return
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D. Sales allowance - ✔✔D. Sales allowance
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The purpose of recording an allowance for uncollectible accounts is to:
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A. Record the sales returns and allowances
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B. Report net sales conservatively
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verified detailed solutions || ||
Credit sales are recorded as
|| || || ||
A. Debit Cash, credit Deferred Revenue
|| || || || ||
B. Debit Service Revenue, credit Accounts Receivable
|| || || || || ||
C. Debit Cash, credit Service Revenue
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D. Debit Accounts Receivable, credit Service Revenue - ✔✔D. Debit Accounts
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Receivable, credit Service Revenue || || ||
Identify the condition(s) that must exist for a sale and the related receivable to be
|| || || || || || || || || || || || || || ||
recognized.
A. Collection of cash is probable
|| || || || ||
B. The company must have collected cash from at least one previous sale to the
|| || || || || || || || || || || || || || ||
customer
C. Goods or services have been provided to the customer
|| || || || || || || || ||
D. Two of the other answers are conditions that must exist - ✔✔D. Two of the other
|| || || || || || || || || || || || || || || || ||
answers are conditions that must exist
|| || || || ||
A and C
|| ||
Which of the following items are classified as receivables
|| || || || || || || ||
A. Tax refund claims
|| || ||
,B. Amounts owed by customers
|| || || ||
C. Amounts loaned and expected to be collected
|| || || || || || ||
D. All of the other answers are classified as receivables - ✔✔D. All of the other
|| || || || || || || || || || || || || || || ||
answers are classified as receivables
|| || || ||
Identify the likely disadvantage(s) of extending credit to customers
|| || || || || || || ||
A. Delay or failure to collect cash
|| || || || || ||
B Lower profitability
|| ||
C. Lower Revenues
|| ||
D. All of the other answers are disadvantages of extending credit to customers - ✔✔A.
|| || || || || || || || || || || || || || ||
Delay or failure to collect cash
|| || || || ||
The Sales Returns account is an expense account
|| || || || || || ||
A. True
||
B. False - ✔✔B. False
|| || || || ||
Sales Returns is a contra revenue account
|| || || || || ||
Which of the following computations would be used to compute Net Revenue?
|| || || || || || || || || || ||
A. Total Revenue + Accounts Receivable - Sales Discounts Sales Allowances
|| || || || || || || || || ||
B. Net Revenue + Sales Allowances - Sales Discounts
|| || || || || || || ||
C. Total Revenue - Sales Discounts - Sales Allowances
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,D. Net Income - Change in Accounts Receivable - ✔✔C. Total Revenue - Sales
|| || || || || || || || || || || || || ||
Discounts - Sales Allowances || || ||
Trade discounts represent a discount offered to the purchasers for a quick payment
|| || || || || || || || || || || ||
A. True
||
B. False - ✔✔B. False
|| || || ||
Trade discounts represent a reduction in the listed price of a product and service
|| || || || || || || || || || || || ||
When customers purchase products on account, Knomark, Inc. offers them a 2%
|| || || || || || || || || || || ||
reduction in the amount owed if they pay within 10 days. This is an example of a:
|| || || || || || || || || || || || || || || ||
A. Bad debt
|| ||
B. Sales Discount
|| ||
C. Sales Return
|| ||
D. Sales Allowances - ✔✔B. Sales Discount
|| || || || || ||
When a comany sells a $100 service with a 20% trade discount, $80 of revenue is
|| || || || || || || || || || || || || || || ||
recognized. ||
A. True
||
B. False - ✔✔A. True
|| || || ||
A sales allowance is recorded as a debit to Accounts Receivable and a credit to Sales
|| || || || || || || || || || || || || || || ||
Allowances.
, A. True
||
B. False - ✔✔B. False
|| || || ||
A sales allowance is recorded as a debit to Sales Allowances and a credit to Accounts
|| || || || || || || || || || || || || || || ||
Receivable.
The net realizable value of accounts receivable is the full amount owed by customers
|| || || || || || || || || || || || ||
A. True
||
B. False - ✔✔B. False
|| || || || ||
Net realizable value is a net amount of cash we expect to collect.
|| || || || || || || || || || || ||
LePage's Inc. shipped the wrong color of paint to a customer. The customer agreed to
|| || || || || || || || || || || || || || ||
keep the paint upon being offered a 15% price reduction. The price
|| || || || || || || || || || ||
reduction is an example of a: || || || || ||
A. Sales Revenue
|| ||
B. Sales Discount
|| ||
C. Sales Return
|| ||
D. Sales allowance - ✔✔D. Sales allowance
|| || || || || ||
The purpose of recording an allowance for uncollectible accounts is to:
|| || || || || || || || || ||
A. Record the sales returns and allowances
|| || || || || ||
B. Report net sales conservatively
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