A304 EXAM 2 QUESTIONS & ANSWERS
Revenue Recognition Principle - Answers :requires for revenues be recorded when...
the company transfers goods and services to customers in the amount the company
expects to receive
Revenue is recognized when the ____________ ____________ is satisfied - Answers
:performance obligation
Common incentives to motivate customers to buy their products and pay quickly for
purchases include... - Answers :credit cards, discounts, and returns
Unavoidable fee - Answers :the fee to use a credit card
Accounts Receivable Gross - Answers :the total amount of invoices owed to the
company
Accounts Receivable Net - Answers :The estimated net amount the company expects to
collect
Another name for AR Net - Answers :Net Realizable Value
Allowance for Doubtful Accounts - Answers :the total of estimated uncollectable
customer accounts
What is Allowance for Doubtful Accounts increased/decreased with? - Answers
:increased by bad debt expense and decreased when customer accounts are written off
Bad debts result from... - Answers :credit customers who will not pay the amount they
owe, regardless of collection efforts
GAAP (expense recognition principle) requires bad debt expense to be recorded when?
- Answers :in the same accounting period in which related sale is made
Allowance method steps? - Answers :Making end-of-period adjustment entry to record
bad debt expense estimate, write-off specific accounts determined to be uncollectible
What does adjusting entry look like for write offs? - Answers :Debit Allowance for
Doubtful Accounts, Credit Accounts Receivable
What accounts are effected by write offs? (ex. net income, accounts receivable, total
assets) - Answers :None
What is effect of recoveries on total assets and net income? - Answers :No effect
Revenue Recognition Principle - Answers :requires for revenues be recorded when...
the company transfers goods and services to customers in the amount the company
expects to receive
Revenue is recognized when the ____________ ____________ is satisfied - Answers
:performance obligation
Common incentives to motivate customers to buy their products and pay quickly for
purchases include... - Answers :credit cards, discounts, and returns
Unavoidable fee - Answers :the fee to use a credit card
Accounts Receivable Gross - Answers :the total amount of invoices owed to the
company
Accounts Receivable Net - Answers :The estimated net amount the company expects to
collect
Another name for AR Net - Answers :Net Realizable Value
Allowance for Doubtful Accounts - Answers :the total of estimated uncollectable
customer accounts
What is Allowance for Doubtful Accounts increased/decreased with? - Answers
:increased by bad debt expense and decreased when customer accounts are written off
Bad debts result from... - Answers :credit customers who will not pay the amount they
owe, regardless of collection efforts
GAAP (expense recognition principle) requires bad debt expense to be recorded when?
- Answers :in the same accounting period in which related sale is made
Allowance method steps? - Answers :Making end-of-period adjustment entry to record
bad debt expense estimate, write-off specific accounts determined to be uncollectible
What does adjusting entry look like for write offs? - Answers :Debit Allowance for
Doubtful Accounts, Credit Accounts Receivable
What accounts are effected by write offs? (ex. net income, accounts receivable, total
assets) - Answers :None
What is effect of recoveries on total assets and net income? - Answers :No effect
