ACCT 201A Exam 2 Hoffman: Questions With Complete
Solutions
When a company provides services on account, which of the following
accounts is debited?
Service Revenue.
Accounts Payable.
Accounts Receivable.
Cash. Right Ans - Accounts Receivable.
A sales discount is recorded by the seller as a(n):
Expense.
Contra asset.
Contra revenue.
Liability. Right Ans - contra
On January 18, a company provides services to a customer for $500 and offers
the customer terms 2/10, n/30. Which of the following would be recorded
when the customer remits payment on January 25?
Debit Cash for $500.
Credit Accounts Receivable for $490.
Credit Service Revenue for $500.
Debit Sales Discount for $10. Right Ans - Debit Sales Discount for $10.
Which of the following refers to the seller reducing the customer's balance
owed because of some deficiency in the company's product or service?
Sales Allowance.
Sales Discount.
Trade Discount.
Allowance for Uncollectible Accounts. Right Ans - Sales Allowance.
Use the information below to calculate net revenues.
Service Revenue$100,000 Sales Discounts$2,000 Accounts Receivable$15,000
Sales Allowances$7,000 Cash$18,000
$91,000.
$85,000.
$68,000.
,$98,000. Right Ans - $91,000. (Don't include cash or account receivable
both assets)
On August 4, Sanders provides services to Frederickson for $5,000, terms
3/10, n/30. Frederickson pays for the services on August 12. What amount
would Sanders record as revenue on August 4?
$4,850.
$5,000.
$5,150.
$5,300. Right Ans - $5,000.
On August 4, Sanders provides services to Frederickson for $5,000, terms
3/10, n/30. Frederickson pays for the services on August 12. What is the
amount of net revenues (total revenue minus sales discounts) as of August
12?
$4,850.
$5,000.
$5,150.
$5,300. Right Ans - $4,850.
The entry to record the estimate for uncollectible accounts includes:
A debit to Allowance for Uncollectible Accounts.
A credit to Accounts Receivable.
A debit to Sales Revenue.
A debit to Bad Debt Expense. Right Ans - A debit to Bad Debt Expense.
Under the allowance method for uncollectible accounts, the balance of
Allowance for Uncollectible Accounts increases when:
Future bad debts are estimated.
Bad debts actually occur.
Cash is received from customers.
Never. Right Ans - Future bad debts are estimated.
Schmidt Company's Accounts Receivable balance is $100,000, its adjusted
balance in Allowance for Uncollectible Accounts is $4,000, and its bad debt
expense is $3,800. The net amount of accounts receivable is:
$96,000.
$96,200.
$100,000.
, $104,000. Right Ans - $96,000.
At the end of its first year of operations, a company establishes an allowance
for future uncollectible accounts for $5,600. At what amount would bad debt
expense be reported in the current year's income statement?
$800.
$4,800.
$5,600.
$6,400. Right Ans - $5,600.
If a company uses the allowance method of accounting for uncollectible
accounts and writes off a specific account:
Net accounts receivable increase.
Net accounts receivable decrease.
Net accounts receivable do not change.
The effect on net account receivables depends on the relationship between the
allowance account balance and the amount of the write off. Right Ans - Net
accounts receivable do not change.
If a company uses the allowance method of accounting for uncollectible
accounts and collects cash on an account receivable previously written off:
Total assets increase.
Total assets decrease.
There is no change in total assets.
The change in total assets depends on the relationship between the allowance
account balance and the amount of the collection. Right Ans - There is no
change in total assets.
The effect of writing off a specific account receivable is:
A reduction in the Allowance for Uncollectible Accounts.
An increase in the amount of Accounts Receivable.
An increase in the amount of Bad Debt Expense.
An increase in the Allowance for Uncollectible Accounts. Right Ans - A
reduction in the Allowance for Uncollectible Accounts.
On December 31, the Accounts Receivable ending balance is $80,000. Assume
that the unadjusted balance of Allowance for Uncollectible Accounts is a debit
of $500 and that the company estimates 7% of the accounts receivable will
Solutions
When a company provides services on account, which of the following
accounts is debited?
Service Revenue.
Accounts Payable.
Accounts Receivable.
Cash. Right Ans - Accounts Receivable.
A sales discount is recorded by the seller as a(n):
Expense.
Contra asset.
Contra revenue.
Liability. Right Ans - contra
On January 18, a company provides services to a customer for $500 and offers
the customer terms 2/10, n/30. Which of the following would be recorded
when the customer remits payment on January 25?
Debit Cash for $500.
Credit Accounts Receivable for $490.
Credit Service Revenue for $500.
Debit Sales Discount for $10. Right Ans - Debit Sales Discount for $10.
Which of the following refers to the seller reducing the customer's balance
owed because of some deficiency in the company's product or service?
Sales Allowance.
Sales Discount.
Trade Discount.
Allowance for Uncollectible Accounts. Right Ans - Sales Allowance.
Use the information below to calculate net revenues.
Service Revenue$100,000 Sales Discounts$2,000 Accounts Receivable$15,000
Sales Allowances$7,000 Cash$18,000
$91,000.
$85,000.
$68,000.
,$98,000. Right Ans - $91,000. (Don't include cash or account receivable
both assets)
On August 4, Sanders provides services to Frederickson for $5,000, terms
3/10, n/30. Frederickson pays for the services on August 12. What amount
would Sanders record as revenue on August 4?
$4,850.
$5,000.
$5,150.
$5,300. Right Ans - $5,000.
On August 4, Sanders provides services to Frederickson for $5,000, terms
3/10, n/30. Frederickson pays for the services on August 12. What is the
amount of net revenues (total revenue minus sales discounts) as of August
12?
$4,850.
$5,000.
$5,150.
$5,300. Right Ans - $4,850.
The entry to record the estimate for uncollectible accounts includes:
A debit to Allowance for Uncollectible Accounts.
A credit to Accounts Receivable.
A debit to Sales Revenue.
A debit to Bad Debt Expense. Right Ans - A debit to Bad Debt Expense.
Under the allowance method for uncollectible accounts, the balance of
Allowance for Uncollectible Accounts increases when:
Future bad debts are estimated.
Bad debts actually occur.
Cash is received from customers.
Never. Right Ans - Future bad debts are estimated.
Schmidt Company's Accounts Receivable balance is $100,000, its adjusted
balance in Allowance for Uncollectible Accounts is $4,000, and its bad debt
expense is $3,800. The net amount of accounts receivable is:
$96,000.
$96,200.
$100,000.
, $104,000. Right Ans - $96,000.
At the end of its first year of operations, a company establishes an allowance
for future uncollectible accounts for $5,600. At what amount would bad debt
expense be reported in the current year's income statement?
$800.
$4,800.
$5,600.
$6,400. Right Ans - $5,600.
If a company uses the allowance method of accounting for uncollectible
accounts and writes off a specific account:
Net accounts receivable increase.
Net accounts receivable decrease.
Net accounts receivable do not change.
The effect on net account receivables depends on the relationship between the
allowance account balance and the amount of the write off. Right Ans - Net
accounts receivable do not change.
If a company uses the allowance method of accounting for uncollectible
accounts and collects cash on an account receivable previously written off:
Total assets increase.
Total assets decrease.
There is no change in total assets.
The change in total assets depends on the relationship between the allowance
account balance and the amount of the collection. Right Ans - There is no
change in total assets.
The effect of writing off a specific account receivable is:
A reduction in the Allowance for Uncollectible Accounts.
An increase in the amount of Accounts Receivable.
An increase in the amount of Bad Debt Expense.
An increase in the Allowance for Uncollectible Accounts. Right Ans - A
reduction in the Allowance for Uncollectible Accounts.
On December 31, the Accounts Receivable ending balance is $80,000. Assume
that the unadjusted balance of Allowance for Uncollectible Accounts is a debit
of $500 and that the company estimates 7% of the accounts receivable will
