MGMT 200 EXAM 2 2026 PRACTICE
QUESTIONS AND ANSWERS TOP REVIEW A+
◉ Credit Sales/Services on Account/Sales on Account. Answer:
Transfer of products and services to a customer today while bearing
the risk of collecting payment from that customer in the future
◉ How to record a credit sale. Answer: Debit to Accounts Receivable,
Credit to Service/Sales Revenue AT THE TIME OF TRANSACTION
◉ Nontrade receivables. Answer: Receivables that originate from
sources other than customers - includes tax refund claims, interest
receivable, and loans by the company to other entities, including
stockholders and employees
◉ Notes Receivable. Answer: Receivables that are accompanied by
formal credit arrangements made with written debt instruments (or
notes)
◉ Net revenues. Answer: a company's total revenues less any
amounts for discounts, returns, and allowances
◉ trade discounts. Answer: a reduction in the list price of a product
or service
,◉ how to record trade discounts. Answer: record the sale at the
discounted price - accounts receivable and service revenue
◉ sales return. Answer: consumer returns a product
◉ sales allowance. Answer: seller reduces the customer's balance
owed or provides at least a partial refund because of some
deficiency in the company's product or service
◉ how to record a sales return. Answer: reduce the customer's "on
account" balance or issues a cash refund if the sale was for cash
◉ how to record a sales allowance. Answer: record a debit in sales
allowances and a credit in accounts receivable
◉ contra revenue account. Answer: sales returns, sales allowances,
and sales discounts are classified as contra revenues; contra revenue
account is an account with a balance that is opposite, or "contra" to
that of its related revenue account
◉ sales discount. Answer: reduction in the amount to be paid by a
credit customer if payment on account is made within a specified
period of time
, ◉ 2/10. Answer: two ten - indicates the customer will receive a 2%
discount if the amount owed is paid within 10 days
◉ discount terms. Answer: a shorthand way to communicate the
amount of the discount and the time period within which it's
available
◉ n/30. Answer: net thirty - if the customer does not take the
discount, full payment net of any returns or allowances is due within
30 days
◉ how to record a sales discount. Answer: record debit to cash, debit
to sales discounts of money discounted, and credit to accounts
receivable of cash + money discounted
◉ why do we use contra accounts. Answer: to differentiate between
transactions that would take place under one big revenue account
◉ end-of-period adjustment for contra revenues. Answer: at the end
of the year, the company must estimate any additional discounts,
returns, and sales allowances that will occur in the following year as
a result of sales transactions in the current year, then subtract it
from total revenue to get net revenue in the income statement
QUESTIONS AND ANSWERS TOP REVIEW A+
◉ Credit Sales/Services on Account/Sales on Account. Answer:
Transfer of products and services to a customer today while bearing
the risk of collecting payment from that customer in the future
◉ How to record a credit sale. Answer: Debit to Accounts Receivable,
Credit to Service/Sales Revenue AT THE TIME OF TRANSACTION
◉ Nontrade receivables. Answer: Receivables that originate from
sources other than customers - includes tax refund claims, interest
receivable, and loans by the company to other entities, including
stockholders and employees
◉ Notes Receivable. Answer: Receivables that are accompanied by
formal credit arrangements made with written debt instruments (or
notes)
◉ Net revenues. Answer: a company's total revenues less any
amounts for discounts, returns, and allowances
◉ trade discounts. Answer: a reduction in the list price of a product
or service
,◉ how to record trade discounts. Answer: record the sale at the
discounted price - accounts receivable and service revenue
◉ sales return. Answer: consumer returns a product
◉ sales allowance. Answer: seller reduces the customer's balance
owed or provides at least a partial refund because of some
deficiency in the company's product or service
◉ how to record a sales return. Answer: reduce the customer's "on
account" balance or issues a cash refund if the sale was for cash
◉ how to record a sales allowance. Answer: record a debit in sales
allowances and a credit in accounts receivable
◉ contra revenue account. Answer: sales returns, sales allowances,
and sales discounts are classified as contra revenues; contra revenue
account is an account with a balance that is opposite, or "contra" to
that of its related revenue account
◉ sales discount. Answer: reduction in the amount to be paid by a
credit customer if payment on account is made within a specified
period of time
, ◉ 2/10. Answer: two ten - indicates the customer will receive a 2%
discount if the amount owed is paid within 10 days
◉ discount terms. Answer: a shorthand way to communicate the
amount of the discount and the time period within which it's
available
◉ n/30. Answer: net thirty - if the customer does not take the
discount, full payment net of any returns or allowances is due within
30 days
◉ how to record a sales discount. Answer: record debit to cash, debit
to sales discounts of money discounted, and credit to accounts
receivable of cash + money discounted
◉ why do we use contra accounts. Answer: to differentiate between
transactions that would take place under one big revenue account
◉ end-of-period adjustment for contra revenues. Answer: at the end
of the year, the company must estimate any additional discounts,
returns, and sales allowances that will occur in the following year as
a result of sales transactions in the current year, then subtract it
from total revenue to get net revenue in the income statement
