Q&A 2/17

D. Debit Accounts Receivable, credit Service Revenue

Credit sales are recorded as: A. Debit Cash, credit Deferred Revenue B. Debit Service Revenue, credit Accounts Receivable C. Debit Cash, credit Service Revenue D. Debit Accounts Receivable, credit Service Revenue

D. Two of the other answers are conditions that must exist Note: A and C are the two other answers.

Identify the condition(s) that must exist for a sale and the related receivable to be recognized. A. Collection of cash is probable B. The company must have collected cash from at least one previous sale to the customer C. Goods or services have been provided to the customer D. Two of the other answers are conditions that must exist

A. Delay or failure to collect cash

Identify the likely disadvantage(s) of extending credit to customers: A. Delay or failure to collect cash B. Lower profitability C. Lower revenues D. All of the other answers are disadvantages of extending credit to customers

B. False Note: Sales Returns is a contra revenue account.

The Sales Returns account is an expense account. A. True B. False

B. False Note: Trade discounts represent a reduction in the listed price of a product or service

Trade discounts represent a discount offered to the purchasers for quick payment. A. True B. False

C. Total Revenues - Sales Discounts - Sales Allowances

Which of the following computations would be used to compute Net Revenue? A. Total Revenue + Accounts Receivable - Sales Discounts - Sales Allowances B. Net Revenue + Sales Allowances - Sales Discounts C. Total Revenue - Sales Discounts - Sales Allowances D. Net Income - Change in Account Receivable

D. All of the other answers are classified as receivables

Which of the following items are classified as receivables? A. Tax refund claims B. Amount owed by customers C. Amounts loaned and expected to be collected D. All of the other answers are classified as receivables