1
TTU ACCT 2300 EXAM 3 Questions with Correct
Answers | Updated (100% Correct Answers)
A doctor for the Sentovich Family Practice performs a sports physical exam for Liz
Hardy on September 1. The charge for the exam is $100; Hardy's insurance
company, Cardinal Health, is billed for the entire $100 on September 1. Cardinal
Health receives the invoice on September 2, and enters the amount into its
payment system on September 4. Sentovich Family Practice receives the $100
payment from Cardinal Health on September 20. On which date would Sentovich
Family Practice recognize the revenue for Hardy's physical?
A. September 4
B. September 20
C. September 2
D. September 1 Answer: D. September 1
On July 15, Gunderson Company sold and shipped merchandise on account for
$6,000 to a customer, terms FOB shipping point, n/30. Gunderson's cost of goods
sold is 40% of sales. How is Gunderson impacted by this sale on July 15?
A. Its assets will increase, as will its equity.
B. Its assets will remain the same, while its equity decreases.
C. Its assets will increase, while its equity remains the same.
© 2026 All rights reserved
,2
D. Its assets will remain the same, while its equity increases. Answer: A. Its assets
will increase, as will its equity.
Fairmont Company has shipped goods to Willowbook Recreation FOB shipping
point. Fairmont will recognize sales revenue when
A. the customer has paid the invoice.
B. The goods leave Fairmont's shipping dock.
C. Willowbrook has received the goods.
D. Fairmont and Willowbrook agree that the revenue should be recognized.
Answer: B. The goods leave Fairmont's shipping dock.
Which of the following statements regarding contracts is incorrect?
A. For a business that provides services, the performance obligation is generally
satisfied when the service provider has substantially completed the service for
the customer.
B. A contract is an agreement between two parties that creates enforceable rights
or performance obligations.
C. Identifying the contract with the customer is the first step of the revenue
recognition model.
D. A contract must be written to be valid. Answer: D. A contract must be written
to be valid.
© 2026 All rights reserved
, 3
When a customer returns a product to McFarland Merchandise that the customer
purchased on account, McFarland will issue a ____________ to authorize a credit to
the customer's account receivable on McFarland's books:
A. manager approval
B. return authorization
C. refund note
D. credit memo Answer: D. credit memo
What is the financial impact on a company when a customer returns a product
for a refund?
A. Sales revenue will not be impacted because the company has already accrued
for estimated refunds and returns.
B. Sales revenue will decrease because sales revenue will be debited.
C. Sales revenue will increase because sales revenue will be credited.
D. Returns expense will increase because returns expense will be debited.
Answer: A. Sales revenue will not be impacted because the company has already
accrued for estimated refunds and returns.
Which of the following statements is correct?
A. If a customer returns a product, sales revenue will be credited.
© 2026 All rights reserved
TTU ACCT 2300 EXAM 3 Questions with Correct
Answers | Updated (100% Correct Answers)
A doctor for the Sentovich Family Practice performs a sports physical exam for Liz
Hardy on September 1. The charge for the exam is $100; Hardy's insurance
company, Cardinal Health, is billed for the entire $100 on September 1. Cardinal
Health receives the invoice on September 2, and enters the amount into its
payment system on September 4. Sentovich Family Practice receives the $100
payment from Cardinal Health on September 20. On which date would Sentovich
Family Practice recognize the revenue for Hardy's physical?
A. September 4
B. September 20
C. September 2
D. September 1 Answer: D. September 1
On July 15, Gunderson Company sold and shipped merchandise on account for
$6,000 to a customer, terms FOB shipping point, n/30. Gunderson's cost of goods
sold is 40% of sales. How is Gunderson impacted by this sale on July 15?
A. Its assets will increase, as will its equity.
B. Its assets will remain the same, while its equity decreases.
C. Its assets will increase, while its equity remains the same.
© 2026 All rights reserved
,2
D. Its assets will remain the same, while its equity increases. Answer: A. Its assets
will increase, as will its equity.
Fairmont Company has shipped goods to Willowbook Recreation FOB shipping
point. Fairmont will recognize sales revenue when
A. the customer has paid the invoice.
B. The goods leave Fairmont's shipping dock.
C. Willowbrook has received the goods.
D. Fairmont and Willowbrook agree that the revenue should be recognized.
Answer: B. The goods leave Fairmont's shipping dock.
Which of the following statements regarding contracts is incorrect?
A. For a business that provides services, the performance obligation is generally
satisfied when the service provider has substantially completed the service for
the customer.
B. A contract is an agreement between two parties that creates enforceable rights
or performance obligations.
C. Identifying the contract with the customer is the first step of the revenue
recognition model.
D. A contract must be written to be valid. Answer: D. A contract must be written
to be valid.
© 2026 All rights reserved
, 3
When a customer returns a product to McFarland Merchandise that the customer
purchased on account, McFarland will issue a ____________ to authorize a credit to
the customer's account receivable on McFarland's books:
A. manager approval
B. return authorization
C. refund note
D. credit memo Answer: D. credit memo
What is the financial impact on a company when a customer returns a product
for a refund?
A. Sales revenue will not be impacted because the company has already accrued
for estimated refunds and returns.
B. Sales revenue will decrease because sales revenue will be debited.
C. Sales revenue will increase because sales revenue will be credited.
D. Returns expense will increase because returns expense will be debited.
Answer: A. Sales revenue will not be impacted because the company has already
accrued for estimated refunds and returns.
Which of the following statements is correct?
A. If a customer returns a product, sales revenue will be credited.
© 2026 All rights reserved
