ACC 212 Exam 3 questions with 100%
correct answers rated A+ passed
True - ANS ✔✔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.
False - ANS ✔✔T or F: Sales revenue is often the smallest amount depicted in a company's
income statement.
True - ANS ✔✔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.
False - ANS ✔✔T or F: There is no relationship between revenue recognition and a seller's
promise to deliver goods and services to customers.
True - ANS ✔✔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.
customers, cash - ANS ✔✔In the sales process, an enterprise provides goods and services to
______ in exchange for ________.
deferred/unearned - ANS ✔✔________________ revenue is a current liability that arises when
an enterprise receives cash from customers before providing promised goods or services.
Inventory - ANS ✔✔What does a customer ultimately transfer to a seller as part of the sales
process?
, A customer inquiry - ANS ✔✔What might be an initial element of the sales process?
Gross profit - ANS ✔✔What income statement subtotal is equal to net sales minus cost of goods
sold?
Accounts Receivable - ANS ✔✔What balance sheet asset might informally be noted as "A/R"?
Performance obligations - ANS ✔✔What term does the FASB use to describe a seller's promise
to deliver goods or services to customers?
Step 5 - ANS ✔✔During which step of the FASB's revenue recognition process will an enterprise
recognize revenue?
Two - ANS ✔✔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?
Depending upon facts and circumstances, either amount could be possible - ANS ✔✔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?
Deferred Revenue - ANS ✔✔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
correct answers rated A+ passed
True - ANS ✔✔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.
False - ANS ✔✔T or F: Sales revenue is often the smallest amount depicted in a company's
income statement.
True - ANS ✔✔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.
False - ANS ✔✔T or F: There is no relationship between revenue recognition and a seller's
promise to deliver goods and services to customers.
True - ANS ✔✔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.
customers, cash - ANS ✔✔In the sales process, an enterprise provides goods and services to
______ in exchange for ________.
deferred/unearned - ANS ✔✔________________ revenue is a current liability that arises when
an enterprise receives cash from customers before providing promised goods or services.
Inventory - ANS ✔✔What does a customer ultimately transfer to a seller as part of the sales
process?
, A customer inquiry - ANS ✔✔What might be an initial element of the sales process?
Gross profit - ANS ✔✔What income statement subtotal is equal to net sales minus cost of goods
sold?
Accounts Receivable - ANS ✔✔What balance sheet asset might informally be noted as "A/R"?
Performance obligations - ANS ✔✔What term does the FASB use to describe a seller's promise
to deliver goods or services to customers?
Step 5 - ANS ✔✔During which step of the FASB's revenue recognition process will an enterprise
recognize revenue?
Two - ANS ✔✔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?
Depending upon facts and circumstances, either amount could be possible - ANS ✔✔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?
Deferred Revenue - ANS ✔✔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
