Business > EXAM > MGMT 200 Exam 2 | 200 questions| with complete solution (Purdue University) (All)

MGMT 200 Exam 2 | 200 questions| with complete solution (Purdue University)

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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 custom... er 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) [Show More]

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