ACC 212 Exam 3 Questions with Correct Answers Latest Update 2025/2026
T or F: A company's income statement might use "sales revenue" or "service revenue" to
describe the transfer of goods or services to customers. - Answers True
T or F: Sales revenue is often the smallest amount depicted in a company's income statement. -
Answers False
T or F: Riley's Produce Stand only accepts cash or Venmo as payment. It does not extend credit
to customers. Therefore, Riley's Produce Stand will not report bad debt expense on its income
statement. - Answers True
T or F: There is no relationship between revenue recognition and a seller's promise to deliver
goods and services to customers. - Answers False
T or F: Although credit card transactions are subject to a processing fee, many sellers accept
credit cards because they offer a convenient way to promptly collect payment from customers. -
Answers True
In the sales process, an enterprise provides goods and services to ______ in exchange for
________. - Answers customers, cash
________________ revenue is a current liability that arises when an enterprise receives cash from
customers before providing promised goods or services. - Answers deferred/unearned
What does a customer ultimately transfer to a seller as part of the sales process? - Answers
Inventory
What might be an initial element of the sales process? - Answers A customer inquiry
What income statement subtotal is equal to net sales minus cost of goods sold? - Answers
Gross profit
What balance sheet asset might informally be noted as "A/R"? - Answers Accounts Receivable
What term does the FASB use to describe a seller's promise to deliver goods or services to
customers? - Answers Performance obligations
During which step of the FASB's revenue recognition process will an enterprise recognize
revenue? - Answers Step 5
Griffin's Game Gear manufactures pickleball racquets. The company sells racquets directly to
customers for a selling price of $30. Customers can optionally purchase a two-year extended
warranty for $10. If a customer purchases both a racquet and the extended warranty, how many
performance obligations exist? - Answers Two
Messing Pavement Professionals (Messing) recently signed a contract to repave Campus Drive
, that runs through GVSU's Allendale campus. The base contract price is $3,000,000. Messing
could earn a $10,000-per-day bonus if it completes the job ahead of schedule. Depending upon
facts, circumstances, and Messing's managerial judgments, which of the following amounts
could be the transaction price identified in step #3 of the revenue recognition process if
Messing is highly confident that it will complete the job 10 days early? - Answers Depending
upon facts and circumstances, either amount could be possible
On October 31, 2022, Lah's Financial Advising Service (Lah Financial) signed a contract to
provide financial planning services to a customer during November and December 2022. Lah
Financial received a $5,000 deposit from the client, and immediately deposited this amount into
its company checking account. In addition to recording the increase to its checking account,
which other Lah Financial account will be affected by the October 31 cash receipt transaction? -
Answers Deferred Revenue
Alexis' Electric Charging Solutions (AECS) provides charging solutions for electric vehicles
(essentially an all-electric version of a traditional gas station). AECS provides both the electricity
and maintenance of the electric charging stations. Assume that AECS contracted with Caleb's
Carport to provide electricity at a price of $0.10 per kilowatt-hour (kWh). AECS also agrees to
maintain the charging equipment for Caleb's Carport by charging a flat fee of $10,000 per year
for the 2023-2027 contract period. What amount of revenue should AECS record with respect to
Caleb's Carport if Caleb's Carport consumed 200,000 kWh of electricity during 2023? - Answers
$30,000
Which of the following organizations might help an enterprise evaluate the risk of extending
credit to a customer? - Answers Both Experian and Equifax are resources for assessing a
customers credit risk.
Maria's Track & Field Warehouse reported an allowance for uncollectible receivables equal to
$30,000 at December 31, 2021. The company believes a $50,000 allowance will be warranted at
December 31, 2022. Assuming no other activity has affected the allowance for uncollectible
receivables, what adjustment should the company record as of December 31, 2022? - Answers
$20,000 increase
Maria's Track & Field Warehouse reported an allowance for uncollectible receivables equal to
$30,000 at December 31, 2021. The company had been trying to collect a $3,000 receivable
from Widmann Enterprises, but ultimately decided to write off the receivable as a bad debt.
Assuming no other activity has affected the allowance for uncollectible receivables, what
allowance for uncollectible receivables will the company report as of December 31, 2022? -
Answers $27,000
Damon Enterprises accepted credit cards as customer payment for sales transactions totalling
$100,000. Damon Enterprises processes credit card transactions through GoliathGlobalBank,
which charges a 2.0% processing fee. As a result of these transactions, what amount of sales
revenue will Damon Enterprises record? - Answers $100,000
T or F: A company's income statement might use "sales revenue" or "service revenue" to
describe the transfer of goods or services to customers. - Answers True
T or F: Sales revenue is often the smallest amount depicted in a company's income statement. -
Answers False
T or F: Riley's Produce Stand only accepts cash or Venmo as payment. It does not extend credit
to customers. Therefore, Riley's Produce Stand will not report bad debt expense on its income
statement. - Answers True
T or F: There is no relationship between revenue recognition and a seller's promise to deliver
goods and services to customers. - Answers False
T or F: Although credit card transactions are subject to a processing fee, many sellers accept
credit cards because they offer a convenient way to promptly collect payment from customers. -
Answers True
In the sales process, an enterprise provides goods and services to ______ in exchange for
________. - Answers customers, cash
________________ revenue is a current liability that arises when an enterprise receives cash from
customers before providing promised goods or services. - Answers deferred/unearned
What does a customer ultimately transfer to a seller as part of the sales process? - Answers
Inventory
What might be an initial element of the sales process? - Answers A customer inquiry
What income statement subtotal is equal to net sales minus cost of goods sold? - Answers
Gross profit
What balance sheet asset might informally be noted as "A/R"? - Answers Accounts Receivable
What term does the FASB use to describe a seller's promise to deliver goods or services to
customers? - Answers Performance obligations
During which step of the FASB's revenue recognition process will an enterprise recognize
revenue? - Answers Step 5
Griffin's Game Gear manufactures pickleball racquets. The company sells racquets directly to
customers for a selling price of $30. Customers can optionally purchase a two-year extended
warranty for $10. If a customer purchases both a racquet and the extended warranty, how many
performance obligations exist? - Answers Two
Messing Pavement Professionals (Messing) recently signed a contract to repave Campus Drive
, that runs through GVSU's Allendale campus. The base contract price is $3,000,000. Messing
could earn a $10,000-per-day bonus if it completes the job ahead of schedule. Depending upon
facts, circumstances, and Messing's managerial judgments, which of the following amounts
could be the transaction price identified in step #3 of the revenue recognition process if
Messing is highly confident that it will complete the job 10 days early? - Answers Depending
upon facts and circumstances, either amount could be possible
On October 31, 2022, Lah's Financial Advising Service (Lah Financial) signed a contract to
provide financial planning services to a customer during November and December 2022. Lah
Financial received a $5,000 deposit from the client, and immediately deposited this amount into
its company checking account. In addition to recording the increase to its checking account,
which other Lah Financial account will be affected by the October 31 cash receipt transaction? -
Answers Deferred Revenue
Alexis' Electric Charging Solutions (AECS) provides charging solutions for electric vehicles
(essentially an all-electric version of a traditional gas station). AECS provides both the electricity
and maintenance of the electric charging stations. Assume that AECS contracted with Caleb's
Carport to provide electricity at a price of $0.10 per kilowatt-hour (kWh). AECS also agrees to
maintain the charging equipment for Caleb's Carport by charging a flat fee of $10,000 per year
for the 2023-2027 contract period. What amount of revenue should AECS record with respect to
Caleb's Carport if Caleb's Carport consumed 200,000 kWh of electricity during 2023? - Answers
$30,000
Which of the following organizations might help an enterprise evaluate the risk of extending
credit to a customer? - Answers Both Experian and Equifax are resources for assessing a
customers credit risk.
Maria's Track & Field Warehouse reported an allowance for uncollectible receivables equal to
$30,000 at December 31, 2021. The company believes a $50,000 allowance will be warranted at
December 31, 2022. Assuming no other activity has affected the allowance for uncollectible
receivables, what adjustment should the company record as of December 31, 2022? - Answers
$20,000 increase
Maria's Track & Field Warehouse reported an allowance for uncollectible receivables equal to
$30,000 at December 31, 2021. The company had been trying to collect a $3,000 receivable
from Widmann Enterprises, but ultimately decided to write off the receivable as a bad debt.
Assuming no other activity has affected the allowance for uncollectible receivables, what
allowance for uncollectible receivables will the company report as of December 31, 2022? -
Answers $27,000
Damon Enterprises accepted credit cards as customer payment for sales transactions totalling
$100,000. Damon Enterprises processes credit card transactions through GoliathGlobalBank,
which charges a 2.0% processing fee. As a result of these transactions, what amount of sales
revenue will Damon Enterprises record? - Answers $100,000
