TTU ACCT 2300 EXAM 3 QUESTIONS WITH CORRECT ANSWERS LATEST UPDATE 2025/2026

TTU ACCT 2300 EXAM 3 QUESTIONS WITH CORRECT ANSWERS LATEST UPDATE 2025/2026 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 - Answers 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. D. Its assets will remain the same, while its equity increases. - Answers 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. - Answers 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. - Answers D. A contract must be written to be valid. 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 - Answers 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. - Answers 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. B. A company must accrue for estimated future returns at the end of the period in which the related sales revenue is recognized. C. Sales returns and allowances increase a company's profit. D. The performance obligation in a sale of products is generally satisfied when the customer orders the products. - Answers B. A company must accrue for estimated future returns at the end of the period in which the related sales revenue is recognized. Nordaville Corporation offers credit terms of 3/10, n/45. Which of the following statements is correct? A. The total amount of the invoice must be paid within 10 days of the invoice date. B. No discount is offered for early payment. C. A discount of 3% can be taken if the invoice is paid within 10 days of the invoice date. D. The customer can take a 3% discount if the bill is paid within 45 days of the invoice date. - Answers C. A discount of 3% can be taken if the invoice is paid within 10 days of the invoice date. Which of the following statements is true? A. Write-offs of accounts decrease receivables. B. Collections on account decrease receivables. C. Credit sales increase receivables. D. All of these statements are true. - Answers D. All of these statements are true. Under the allowance method for uncollectible receivables, the entry to record uncollectible-account expense has what effect on the financial statements? A. Increases expenses and increases stockholders' equity B. Decreases net income and decreases assets C. Decreases stockholders' equity and increases liabilities D. Decreases assets and has no effect on net income - Answers B. Decreases net income and decreases assets If the adjusting entry to accrue interest on a note receivable is omitted, then A. assets, net income, and stockholders' equity are overstated. B. liabilities are understated, net income is overstated, and stockholders' equity is overstated. C. assets are overstated, net income is understated, and stockholders' equity is understated.