At the time of a credit sale, a company would record an increase in assets and an increase in
revenues. True or false? Correct Answer: True
Credit sales transfer products and services to a customer today while beari
...
At the time of a credit sale, a company would record an increase in assets and an increase in
revenues. True or false? Correct Answer: True
Credit sales transfer products and services to a customer today while bearing the risk of
collecting payment from that customer in the
future. True or false? Correct Answer: True (Risk of collection)
The ending balance of the Accounts Receivable account was $20,000. Services billed to customers for the period were $50,000, and collections on account from customers were $40,000. What was the beginning balance of Accounts Receivable? Correct Answer: $10,000
If Greenwich, Inc. sells a $100 product with a 20%
trade discount, Greenwich will record $100 of revenue
and $20 of sales expense. True or false? Correct Answer: False (record $80 sales revenue
(trade discount is netted))
The Sales Return Account is an expense account. True or false? Correct Answer: False (Contra revenue account)
A sales allowance is recorded as a debit to Accounts
Receivable and a credit to Sales Allowances. True or false? Correct Answer: False (A sales allowance is recorded as a debit to Sales Allowances and a credit to Accounts Receivable.)
Cambridge Company has the following information:
Total sales $500,000
Sales returns and allowances $50,000
Sales salaries costs (expense) $20,000
Sales travel costs (expense) $5,000
What is the amount of net sales for Cambridge?
A. $500,000
B. $450,000
C. $430,000
D. $425,000 Correct Answer: B. ($500,000 ‐ $50,000 = $450,000)
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