Accounting Conceptual
Action Signs recorded credit sales of $10,000 on the gross method. Terms are 2/20, n/30. Select the correct statement about the entry to record this sale. a. Sales increase $9,800 b. Sales discounts increase $200 c. Accounts receivable increases $10,000. d. All of these are correct
Accounts receivable increases $10,000
Which of the following is not one of the criteria for revenue recognition? a. Persuasive evidence of an arrangement exists. b. Collectability is certain. c. Delivery has occurred or services have been provided. d. The seller's price to the buyer is fixed and determinable.
Collect-ability is certain
All of the following are criteria that the SEC requires to be met before revenue is considered realized (or realizable) and earned EXCEPT: a. Delivery has occurred or services have been provided. b. Persuasive evidence of an arrangement exists. c. The seller's price to the buyer is fixed and determinable. d. Collection is possible.
Collection is possible
If a company uses the direct write-off method of accounting for bad debts, a. It will reduce the accounts receivable account at the end of the accounting period for estimated uncollected accounts. b. It establishes an estimate for the allowance for doubtful accounts. c. When an account is written off, total assets will stay the same. d. It will record bad debt expense only when an account is determined to be uncollected.
It will record bad debt expense only when an account is determined to be uncollected
The principal amount of a note receivable plus the interest due is referred to as the note's a. maturity value. b. expected value. c. face valve. d. promissory value.
Maturity value
What does the phrase, "Revenue is recognized at the point of sale" mean? a. Revenue is recorded in the accounting records when the cash is received from a customer, and reported on the income statement when sold to the customer. b. Revenue is recorded in the accounting records and reported on the income statement when the cash is received from the customer. c. Revenue is recorded in the accounting records when the goods are sold to a customer, and reported on the income statement when the cash payment is received from the customer. d. Revenue is recorded in the accounting records and reported on the income statement when goods are sold and delivered to a customer.
Revenue is recorded in the accounting records and reported on the income statement when goods are sold and delivered to a customer.
When is revenue from the sale of merchandise normally recognized? a. when the customer pays for the merchandise b. when the customer takes possession of the merchandise c. either on the date the customer takes possession of the merchandise or the date on which the customer pays d. when the customer takes possession of the merchandise, if sold for cash, or when payment is received, if sold on credit
When the customer takes possession of the merchandise
Under the gross method, the seller records discounts taken by the buyer a. in a contra-revenue account b. never; discounts are irrelevant under the gross method c. after the receivable is collected d. at the end of the period in question
in a contra-revenue account