Q: Which formula correctly calculates Net Sales?

$$\text{Net Sales} = \text{Sales Revenue} - \text{Sales Returns and Allowances} - \text{Sales Discounts}$$

Q: On August 31, 2026, Whitman Inc. signs a 6-month, 9% promissory note for $1,000,000. What is the total interest revenue earned by the bank at maturity?

$$45,000 ($$calculated as $$1,000,000 \times 0.09 \times \frac{6}{12})$$

Question 1

According to GAAP, when should revenue be recognized in the financial statements?

Accepted Answer

When goods are delivered or services are performed

Question 2

Apple Inc. sells 1,000 iPhones at $$1,000 each on account. The cost to produce each iPhone is 600. $$What is the correct journal entry to record the sale?

Accepted Answer

Debit Accounts Receivable $$1,000,000; Credit Sales Revenue 1$$,000,000. Debit Cost of Goods Sold $$600,000; Credit Inventory 600$$,000

Question 3

Ace Hardware offers a 2/10, n/30 sales discount. If a customer purchases $100,000 of goods and pays within 10 days, how much will the customer pay?

Accepted Answer

$98,000

Question 4

Which of the following best describes the purpose of the Allowance for Uncollectible Accounts?

Accepted Answer

To estimate and match uncollectible accounts expense to the period in which related sales are made

Question 5

Amazon estimates that 1% of its $50,000 million sales will be returned. What is the estimated amount of sales returns?

Accepted Answer

$500 million

Question 6

If Amazon’s cost of goods sold is 60% of sales and $120 million of inventory is returned, what is the cost of goods sold related to the returns?

Accepted Answer

$72 million

Question 7

Which formula correctly calculates Net Sales?

Accepted Answer

$$	ext{Net Sales} = 	ext{Sales Revenue} - 	ext{Sales Returns and Allowances} - 	ext{Sales Discounts}$$

Question 8

Under the percent-of-sales method, if Apple’s total revenues are $400,000 million and the estimated uncollectible percentage is 0.02%, what is the uncollectible account expense?

Accepted Answer

$80 million

Question 9

Which of the following is a key weakness of the direct write-off method for uncollectible accounts?

Accepted Answer

It may overstate assets on the balance sheet

Question 10

A company has a beginning accounts receivable balance of $$200, sales on account of 1$$,500, write-offs of $$100, and an ending balance of 400. $$What is the amount collected from customers?

Accepted Answer

$$1,200 ($$calculated as $$200 + 1,500 - 100 - 400)$$

Question 11

On August 31, 2026, Whitman Inc. signs a 6-month, 9% promissory note for $1,000,000. What is the total interest revenue earned by the bank at maturity?

Accepted Answer

$$45,000 ($$calculated as $$1,000,000 	imes 0.09 	imes \frac{6}{12})$$

Question 12

If a company writes off an uncollectible account under the allowance method, what is the effect on total assets and net income?

Accepted Answer

Total assets do not change; net income does not change

Question 13

Which of the following best describes the aging-of-receivables method?

Accepted Answer

It analyzes individual accounts based on how long they have been outstanding

Question 14

A company’s accounts receivable ledger shows $$28,272 in other receivables, 9 $$from RS, $$3 from TM, and an allowance for uncollectible accounts of 100. $$What is the net accounts receivable reported on the balance sheet?

Accepted Answer

$28,184

Question 15

If a company offers a 2/10, n/30 sales discount and a customer pays after 15 days, how much will the customer pay on a $10,000 invoice?

Accepted Answer

$10,000

Question 16

Which of the following ratios best measures a company’s ability to collect its receivables quickly?

Accepted Answer

Receivables turnover ratio

Question 17

A company estimates bad debt expense using the income statement approach. If sales revenue is $500,000 and the estimated uncollectible percentage is 0.5%, what is the journal entry for bad debt expense?

Accepted Answer

Debit Bad Debt Expense $$2,500; Credit Allowance for Uncollectible Accounts 2$$,500

Question 18

Which of the following is NOT a method to shorten the credit cycle and speed up cash flow from sales?

Accepted Answer

Extending the credit period to customers

Question 19

If a company collects a note receivable plus interest at maturity, which accounts are affected?

Accepted Answer

Cash increases; Notes Receivable and Interest Revenue decrease

Question 20

Which of the following is the correct formula for calculating interest on a note receivable?

Accepted Answer

$$	ext{Interest} = P 	imes I/R 	imes T$$

Receivables and Revenue: Financial Accounting Study Notes

Guida di studio - Domande di pratica

Study guide - Flashcard