ACING MBA 510 FINAL EXAM WITH THE LATEST A+ QUESTIONS
AND ANSWERS STUDY COMPANION.
Revenue recognition principle requires
that revenues be recorded when the company transfers goods and services to
customers
FOB (Free on board) Shipping point, title changes
hands at shipment
FOB destination, title changes
hands on delivery
What does 2/10, n/30 mean?
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?
To encourage customers to pay quickly
How to record a sales discount?
Sales revenue - sales discounts = Net sales
What do sales discounts and sales returns and allowances affect?
The Net sales
An account receivable is created by
a credit sale on an open account
A note receivable is a
promise ni writing to pay a specified amount
A trade receivable is created in
the normal course of business when a sale of merchandise or services on credit occurs
A non-trade receivable arises from
transactions other than the normal sale of merchandise or services
Allowance method is based on
estimates of the expected amount of bad debts
, What accounts does bad debt affect
debit to bad debt expense
credit to allowance for doubtful accounts
Accounts affected by writing of specific uncollectible accounts
debit to allowance for doubtful accounts
credit to accounts receivable
Does bad debt affect the income statement?
No
What accounts are affected by the recovery of a bad debt
-debit accounts receivable
credit allowance for doubtful accounts
and
-debit cash
credit accounts receivable
Ways to estimate bad debt
Percentage of credit sales method
aging of accounts receivable
Percentage of credit sales method bases bad debt expense on
the historical percentage of credit sales that result in bad debt
Percentage of credit sales equation
credit sales X Bad debt loss rate=bad debt expense
Aging of accounts receivable method relies on the fact that
as accounts receivable become older and more overdue, it is less likely that they will be
collected.
Receivables turnover=
Net Sales/Average Net Trade Accounts Receivable
How do you record credit card discounts?
debit cash by (sales revenue-credit card discount)
debit credit card discount
credit sales revenue
Tangible assets have
AND ANSWERS STUDY COMPANION.
Revenue recognition principle requires
that revenues be recorded when the company transfers goods and services to
customers
FOB (Free on board) Shipping point, title changes
hands at shipment
FOB destination, title changes
hands on delivery
What does 2/10, n/30 mean?
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?
To encourage customers to pay quickly
How to record a sales discount?
Sales revenue - sales discounts = Net sales
What do sales discounts and sales returns and allowances affect?
The Net sales
An account receivable is created by
a credit sale on an open account
A note receivable is a
promise ni writing to pay a specified amount
A trade receivable is created in
the normal course of business when a sale of merchandise or services on credit occurs
A non-trade receivable arises from
transactions other than the normal sale of merchandise or services
Allowance method is based on
estimates of the expected amount of bad debts
, What accounts does bad debt affect
debit to bad debt expense
credit to allowance for doubtful accounts
Accounts affected by writing of specific uncollectible accounts
debit to allowance for doubtful accounts
credit to accounts receivable
Does bad debt affect the income statement?
No
What accounts are affected by the recovery of a bad debt
-debit accounts receivable
credit allowance for doubtful accounts
and
-debit cash
credit accounts receivable
Ways to estimate bad debt
Percentage of credit sales method
aging of accounts receivable
Percentage of credit sales method bases bad debt expense on
the historical percentage of credit sales that result in bad debt
Percentage of credit sales equation
credit sales X Bad debt loss rate=bad debt expense
Aging of accounts receivable method relies on the fact that
as accounts receivable become older and more overdue, it is less likely that they will be
collected.
Receivables turnover=
Net Sales/Average Net Trade Accounts Receivable
How do you record credit card discounts?
debit cash by (sales revenue-credit card discount)
debit credit card discount
credit sales revenue
Tangible assets have
