Credit sales are recorded as: Correct Answer: Debit Accounts Receivable, credit Service
Revenue
Identify the likely disadvantage(s) of extending credit to
customers: Correct Answer: Delay or failure to collect cas
...
Credit sales are recorded as: Correct Answer: Debit Accounts Receivable, credit Service
Revenue
Identify the likely disadvantage(s) of extending credit to
customers: Correct Answer: Delay or failure to collect cash
Identify the condition(s) that must exist for a sale and
the related receivable to be recognized: Correct Answer: Collection of cash is probable & Goods or services have been provided to the customer
The Sales Returns account is an expense account: Correct Answer: False (Sales Returns is a contra revenue account)
Which of the following items are classified as
receivables? (3) Correct Answer: Tax refund claims, . Amounts owed by customers, Amounts loaned and expected to be collected
Which of the following computations would be used to
compute Net Revenue? Correct Answer: Total Revenue - Sales Discounts - Sales
Allowances
Trade discounts represent a discount offered to the
purchasers for quick payment. Correct Answer: False (Trade discounts represent a reduction in
the listed price of a product or service)
T/F: The Sales Discounts account is an example of a contra
revenue account.: Correct Answer: True
When customers purchase products on account,
Knomark, Inc. offers them a 2% reduction in the
amount owed if they pay within 10 days. This is an
example of a: Correct Answer: Sales discount
A sales allowance is recorded as a debit to Accounts
Receivable and a credit to Sales Allowances: Correct Answer: False (A sales allowance is recorded as a debit to Sales
Allowances and a credit to Accounts Receivable)
T/F: When a company sells a $100 service with a 20% trade
discount, $80 of revenue is recognized: Correct Answer: True
T/F: If a company has total revenues of $100,000, sales
discounts of $3,000, sales return
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