Which of the following is an advantage of using the net price method for recording cash discounts on credit sales? a. It eases communication with customers at balances. b. It properly reflects current per revenue. c. It simplifies recording of sales returns and allowances. d. It requires less recording keeping than the gross method.

Which of the following is an advantage of using the net price method for recording cash discounts on credit sales? a. It eases communication with customers at balances. b. It properly reflects current per revenue. c. It simplifies recording of sales returns and allowances. d. It requires less recording keeping than the gross method.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter5: Sales And Receivables

Section: Chapter Questions

Problem 5MCQ

See similar textbooks

Similar questions

The percentage-of-receivables basis of estimating uncollectible accounts receivable emphasizes income statement relationships. ignores the existing balance in Allowance for Doubtful Accounts. produces a better estimate of cash realizable value. results in a better matching of expenses with revenues.
30. Which of the following is an advantage of using the net price method for recording cash discounts on credit sales? a. It eases communication with customers about their balances. b. It conservatively reflects current period sales revenue. c. It simplifies recording of sales returns and allowances. d. It requires less record keeping than the gross method.
Which of the following accounts is not a contra-revenue? Group of answer choices A)Sales discounts B)Credit card discounts C)Sales returns and allowances D)Allowance for doubtful accounts E)All the above are contra-revenues
Which is correct with regards to the effects of restricting credit standards? a. Investment in accounts receivable will likely increase b. An increase in recognition of doubtful accounts expense will probably happen c. Positive impact on the net profit can be noted from decline in the quantity of goods sold d. Quantity of units sold will probably decrease and will result to a lower sales revenue
Which of the following statements are true regarding sales discounts (i.e., discounts customers receive for paying quickly)? I. Net Income differs between the net and gross methods when customers do not pay within the discount period. II. The net and gross methods do not affect the amount or timing of cash collected. III. Customers have to elect in advance whether they will pay in time to take the discount. Group of answer choices: I only II only III only I and II only II and III only
Suppose we collected cash from a charge customer and the debit was to Cash and the credit to Sales. How and when would this error be discovered?
The difference between the accounts receivable and the cash collection may be due to the following reasons EXCEPT: Cash discount Trade discounts Sales returns Sales allowances
Which of the following statements is false regarding the different bases used for the allowance method? O A. Three bases are generally accepted, the percentage of sales, the percentage of receivables, and the direct write-off. O B. Management can choose whichever basis it prefers. o C. If management wishes to emphasize the cash realizable value of receivables it will select the percentage of receivables basis. O D. The company must determine its past experience with bad debt losses regardless of which basis it selects.
Which of the following would not be reported on the financial statement? a. Sales discount taken b. Trade receivables c. Trade discounts d. Sales discounts not taken
Which of the following would not result in a reduction of the amount invoiced to a customer when a credit sale is made? A. Quantity discount B. Cash-free discount C. Sales discountD. Two-for-one special
Amounts due from customers that are expected to be collected in the current operating cycle and do not charge interest are known as: Group of answer choices sales returns & allowances cost of goods sold accounts receivable notes receivable The allowance method of estimating uncollectible accounts is widely-used because it follows this principle: Group of answer choices Matching Going-concern Revenue Recognition Cost
Which of the following accounts does not belong in the purchases and disbursement cycle? Group of answer choices a.Prepayments b.Accounts payable c.Sales returns and allowances d.Fixed assets