MGMT 200 EXAM 2 (PURDUE UNIVERSITY) NEWEST 2025 EXAM 2
AND PRACTICE EXAM QUESTIONS AND CORRECT DETAILED
ANSWERS (VERIFIED ANSWERS) |ALREADY GRADED A+
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 - (Correct Answer)-D. Debit Accounts
Receivable, credit Service Revenue
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 - (Correct Answer)-D. Two of the
other answers are conditions that must exist
A and C
Which of the following items are classified as receivables
A. Tax refund claims
B. Amounts owed by customers
C. Amounts loaned and expected to be collected
D. All of the other answers are classified as receivables - (Correct Answer)-D. All of the other
answers are classified as receivables
Identify the likely disadvantage(s) of extending credit to customers
,[Type here]
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 - (Correct
Answer)-A. Delay or failure to collect cash
The Sales Returns account is an expense account
A. True
B. False - (Correct Answer)-B. False
Sales Returns is a contra revenue account
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 Accounts Receivable - (Correct Answer)-C. Total Revenue - Sales
Discounts - Sales Allowances
Trade discounts represent a discount offered to the purchasers for a quick payment
A. True
B. False - (Correct Answer)-B. False
Trade discounts represent a reduction in the listed price of a product and service
,[Type here]
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:
A. Bad debt
B. Sales Discount
C. Sales Return
D. Sales Allowances - (Correct Answer)-B. Sales Discount
When a comany sells a $100 service with a 20% trade discount, $80 of revenue is recognized.
A. True
B. False - (Correct Answer)-A. True
A sales allowance is recorded as a debit to Accounts Receivable and a credit to Sales
Allowances.
A. True
B. False - (Correct Answer)-B. False
A sales allowance is recorded as a debit to Sales Allowances and a credit to Accounts
Receivable.
The net realizable value of accounts receivable is the full amount owed by customers
A. True
B. False - (Correct Answer)-B. False
, [Type here]
Net realizable value is a net amount of cash we expect to collect.
LePage's Inc. shipped the wrong color of paint to a customer. The customer agreed to keep the
paint upon being offered a 15% price reduction. The price
reduction is an example of a:
A. Sales Revenue
B. Sales Discount
C. Sales Return
D. Sales allowance - (Correct Answer)-D. Sales allowance
The purpose of recording an allowance for uncollectible accounts is to:
A. Record the sales returns and allowances
B. Report net sales conservatively
C. Report accounts receivable at net realizable value
D. Report accounts receivable for the total amount of sales in the period - (Correct Answer)-C.
Report accounts receivable at net realizable value
If a company has total revenues of $100,000, sales discounts of $3,000, sales returns of $4,000,
and sales allowances of $2,000, the income statement will report net revenues of $91,000.
A. True
B. False - (Correct Answer)-A. True
Revenues $ 100,000
Less: Sales discounts (3,000)
Less: Sales returns (4,000)
AND PRACTICE EXAM QUESTIONS AND CORRECT DETAILED
ANSWERS (VERIFIED ANSWERS) |ALREADY GRADED A+
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 - (Correct Answer)-D. Debit Accounts
Receivable, credit Service Revenue
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 - (Correct Answer)-D. Two of the
other answers are conditions that must exist
A and C
Which of the following items are classified as receivables
A. Tax refund claims
B. Amounts owed by customers
C. Amounts loaned and expected to be collected
D. All of the other answers are classified as receivables - (Correct Answer)-D. All of the other
answers are classified as receivables
Identify the likely disadvantage(s) of extending credit to customers
,[Type here]
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 - (Correct
Answer)-A. Delay or failure to collect cash
The Sales Returns account is an expense account
A. True
B. False - (Correct Answer)-B. False
Sales Returns is a contra revenue account
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 Accounts Receivable - (Correct Answer)-C. Total Revenue - Sales
Discounts - Sales Allowances
Trade discounts represent a discount offered to the purchasers for a quick payment
A. True
B. False - (Correct Answer)-B. False
Trade discounts represent a reduction in the listed price of a product and service
,[Type here]
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:
A. Bad debt
B. Sales Discount
C. Sales Return
D. Sales Allowances - (Correct Answer)-B. Sales Discount
When a comany sells a $100 service with a 20% trade discount, $80 of revenue is recognized.
A. True
B. False - (Correct Answer)-A. True
A sales allowance is recorded as a debit to Accounts Receivable and a credit to Sales
Allowances.
A. True
B. False - (Correct Answer)-B. False
A sales allowance is recorded as a debit to Sales Allowances and a credit to Accounts
Receivable.
The net realizable value of accounts receivable is the full amount owed by customers
A. True
B. False - (Correct Answer)-B. False
, [Type here]
Net realizable value is a net amount of cash we expect to collect.
LePage's Inc. shipped the wrong color of paint to a customer. The customer agreed to keep the
paint upon being offered a 15% price reduction. The price
reduction is an example of a:
A. Sales Revenue
B. Sales Discount
C. Sales Return
D. Sales allowance - (Correct Answer)-D. Sales allowance
The purpose of recording an allowance for uncollectible accounts is to:
A. Record the sales returns and allowances
B. Report net sales conservatively
C. Report accounts receivable at net realizable value
D. Report accounts receivable for the total amount of sales in the period - (Correct Answer)-C.
Report accounts receivable at net realizable value
If a company has total revenues of $100,000, sales discounts of $3,000, sales returns of $4,000,
and sales allowances of $2,000, the income statement will report net revenues of $91,000.
A. True
B. False - (Correct Answer)-A. True
Revenues $ 100,000
Less: Sales discounts (3,000)
Less: Sales returns (4,000)
