multiple choice questions 29 which of the following statements is correct a revenue 4314160

Multiple Choice Questions

29.Which of the following statements is correct?

A. Revenue is recognized at the time of shipment when goods are shipped FOB destination.

B. Sales returns and allowances are reported as operating expenses on an income statement.

C. A seller records revenue when title and risks of ownership transfer to the buyer.

D. Sales discounts are reported as cost of sales on an income statement.

30.Which of the following would be included in Latimer Company's sales in 2016?

A. Goods shipped from a supplier in 2016 with terms of FOB shipping point. Latimer received the goods in 2016.

B. Goods shipped to customers in 2016 with terms of FOB destination. The customer received the goods in 2017.

C. Goods shipped to customers in 2015 with terms of FOB destination. The customer received the goods in 2016.

D. Goods shipped to customers in 2015 with terms of FOB shipping point. The customer received the goods in 2016.

31.A company sells a product FOB destination. The product is shipped on December 29, 2015 and the customer receives the shipment on January 3, 2016. Which of the following is true?

A. The sale will be recorded when the customer's credit card information is received.

B. The sale will be recorded when the shipment is received by the customer.

C. The sale will be recorded when the shipment is shipped.

D. The sale will be recorded when it is known there will be no returns or allowances.

32.Which of the following is not a reason for the Jones Hardware Store to accept credit cards from customers?

A. Jones can receive its money faster than if it directly extended credit to the customer by an account receivable.

B. The credit card company offers a discount to Jones so that Jones will have more money available for operations.

C. Jones will not have to be concerned with nonsufficient funds checks from customers.

D. Jones will not have to have extra office workers to make phone calls to customers requesting collections on accounts.

33.Newark Company has provided the following information:

• Cash sales, $450,000

• Credit sales, $1,350,000

• Selling and administrative expenses, $330,000

• Sales returns and allowances, $90,000

• Gross profit, $1,360,000

• Increase in accounts receivable, $55,000

• Bad debt expense, $33,000

• Sales discounts, $43,000

• Net income, $1,030,000

How much are Newark's net sales? 

A. $1,634,000.

B. $1,800,000.

C. $1,667,000.

D. $1,745,000.

34.Newark Company has provided the following information:

• Cash sales, $450,000

• Credit sales, $1,350,000

• Selling and administrative expenses, $330,000

• Sales returns and allowances, $90,000

• Gross profit, $1,360,000

• Increase in accounts receivable, $55,000

• Bad debt expense, $33,000

• Sales discounts, $43,000

• Net income, $1,030,000

How much is Newark's cost of sales? 

A. $307,000.

B. $252,000.

C. $440,000.

D. $340,000.

35.Newark Company has provided the following information:

• Cash sales, $450,000

• Credit sales, $1,350,000

• Selling and administrative expenses, $330,000

• Sales returns and allowances, $90,000

• Gross profit, $1,360,000

• Increase in accounts receivable, $55,000

• Bad debt expense, $33,000

• Sales discounts, $43,000

• Net income, $1,030,000

What is the effect of collections from customers on cash flow from operating activities, using the indirect method? 

A. Cash flow increased $975,000.

B. Cash flow increased $395,000.

C. Cash flow decreased $55,000.

D. Cash flow increased $450,000.

An increase in accounts receivable decreases cash flow from operating activities. Cash sales, $450,000 less the increase in accounts receivable, $55,000 = the effect of collections from customers, $395,000.

36.Flyer Company has provided the following information prior to any year-end bad debt adjustment:

• Cash sales, $150,000

• Credit sales, $450,000

• Selling and administrative expenses, $110,000

• Sales returns and allowances, $30,000

• Gross profit, $490,000

• Accounts receivable, $110,000

• Sales discounts, $14,000

• Allowance for doubtful accounts credit balance, $1,200

Flyer prepares an aging of accounts receivable and the result shows that 5% of accounts receivable is estimated to be uncollectible. How much is bad debt expense? 

A. $5,500.

B. $6,700.

C. $4,240.

D. $4,300.

37.Flyer Company has provided the following information prior to any year-end bad debt adjustment:

• Cash sales, $150,000

• Credit sales, $450,000

• Selling and administrative expenses, $110,000

• Sales returns and allowances, $30,000

• Gross profit, $490,000

• Accounts receivable, $110,000

• Sales discounts, $14,000

• Allowance for doubtful accounts credit balance, $1,200

Flyer prepares an aging of accounts receivable and the result shows that 5% of accounts receivable is estimated to be uncollectible. What is the balance in the allowance for doubtful accounts after bad debt expense is recorded? 

A. $5,500.

B. $6,700.

C. $4,240.

D. $4,300.

38.Flyer Company has provided the following information prior to any year-end bad debt adjustment:

• Cash sales, $150,000

• Credit sales, $450,000

• Selling and administrative expenses, $110,000

• Sales returns and allowances, $30,000

• Gross profit, $490,000

• Accounts receivable, $110,000

• Sales discounts, $14,000

• Allowance for doubtful accounts credit balance, $1,200

Flyer estimates bad debt expense assuming that 1.5% of credit sales have historically been uncollectible. How much is Flyer's bad debt expense? 

A. $7,950.

B. $6,750.

C. $5,550.

D. $7,800.

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