MGMT 200 Exam 2-With -2026-2027 21pages

At the time of a credit sale, a company would record an increase in assets and an increase in revenues. True or false? True Credit sales transfer products and services to a customer today while bearing the risk of collecting payment from that customer in the future. True or false? True (Risk of collection) The ending balance of the Accounts Receivable account was $20,000. Services billed to customers for the period were $50,000, and collections on account from customers were $40,000. What was the beginning balance of Accounts Receivable? $10,000 If Greenwich, Inc. sells a $100 product with a 20% trade discount, Greenwich will record $100 of revenue and $20 of sales expense. True or false? False (record $80 sales revenue (trade discount is netted)) The Sales Return Account is an expense account. True or false? False (Contra revenue account) A sales allowance is recorded as a debit to Accounts Receivable and a credit to Sales Allowances. True or false? False (A sales allowance is recorded as a debit to Sales Allowances and a credit to Accounts Receivable.) Cambridge Company has the following information: Total sales $500,000 Sales returns and allowances $50,000 Sales salaries costs (expense) $20,000 Sales travel costs (expense) $5,000 What is the amount of net sales for Cambridge? A. $500,000 B. $450,000 C. $430,000 D. $425,000 B. ($500,000 - $50,000 = $450,000) When customers purchase products on account, Bufford, Inc. offers them a 1% reduction in the amount owed if they pay within 10 days. This is an example of: A. Sales discount B. Sales return C. Sales allowances D. Bad debt