The recognition and valuation of receivables under U.S. GAAP is generally the same as under a. the FASB. O b. IFRS. O c. the SEC. Od the IRS. If Duke Corporation bills Liberty Advisors $15,000 for product sold during the week with terms of 2/10, n30 under the net method, how much and what account will be debited in the entry to record the sale? a. Debit Accounts Receivable for $15,000 b. Debit Sales Revenue for $14,700 C. Debit Accounts Receivable for $14,700 Od. Debit Sales Revenue for $15,000 An unethical practice by companies that are facing sales shortfalls for the period is a. channel stuffing, b. making sales on account c. estimating bad debts. O d. sellers of goods recognizing revenue in the period title passes to the customer. To encourage prompt payment, businesses may offer a sales discount. The discount is a reduction of the normal selling price. Which of the following is NOT a reason that a seller would offer its customers a 5% cash discount? O a Offering cash discounts helps a company avoid borrowing money, Ob. The sooner the customers pay their accounts receivable, cash is more quickly available. c. The company is able to reduce its revenue, which reduces its taxes. d. The seller's collection costs are reduced. Sales revenue is such a key component of a company's success that analysts are interested in a large number of ratios that incorporate sales. Many of these ratios attempt to measure the return the company is earning on sales. All of the following ratios are profitability ratios EXCEPT the a. net profit margin b. gross profit margin Oc operating margin. Od current ratio. What do accountants mean when they say revenue can be recognized under the accrual basis of accounting? O a. The customer gives a deposit on a product to be delivered in six months. b. The company's performance obligation is satisfied. c. The customer promised to come back later and buy the item. O d. Cash is received A company has net sales of $1,000,000; gross profit of $700,000; operating income of $300,000; net income of $100,000; and average accounts receivable of $50,000. The operating margin is O a. 5% b. 70% c. 10%. d. 30%. A 10%, $5,000 note is dated July 1. The principal and interest are due at the end of six months. How much interest will be paid on the due date? a. $5,000 Ob. $3,000 Oc. $500 O d. $250 The underlying difference between the percentage of credit sales method and the aging method is a. the aging method is primarily concerned with the accounts under the direct write-off method. b. the aging method is primarily concerned with appropriately estimating the bad debt expense on the income statement c. the percent of credit sales method is primarily concerned with the net realizable value reported on the balance sheet Od the percent of credit sales method is primarily concerned with appropriately estimating the bad debt expense on the income statement. All of the following are advantages of factoring EXCEPT O a. the fees for factoring can be expensive. b. immediate receipt of cash. O c. fewer employees are needed to manage these accounts. d. factor accepts all risks of collectability. are typically categorized as current assets on the balance sheet. In practice, both and a. accounts receivable, patents O b. accounts receivable, notes receivable c. accounts receivable, sales revenue d. accounts receivable, buildings If the accounts receivable balance in the general ledger is $2,000,000 and the accounts receivable (net) reported on the balance sheet is $1,900,000 (the net realizable value), the allowance for doubtful accounts O a. is $100,000 O b. is the same as the net realizable value, or $1,900,000. O c. is also $2,000,000 d. Cannot be determined from the information given. All of the following are true about debit cards EXCEPT O a. a debit card is not at all like a credit card. Ob. a debit card is used like a credit card but the bank electronically reduces the holder's bank account and increases the merchant's bank account. O c. a purchase using a debit card causes an immediate reduction in the user's bank account. Od debit cards may be disadvantageous to the card holder because transactions cannot be rescinded by stopping payment The principal of a note receivable refers to the amount a. factored by Visa. b. of interest due at maturity. c. loaned plus any interest that is due. Od of money that was loaned. Billing documents are called O a. invoices. O b. purchase orders. O c.accounts receivable. O d. notes receivable. Bad debts are O a. the accounts receivable that are deemed to be uncollectible. b. the notes receivable that are in default because of nonpayment. c. amounts allowed by the seller for a trade discount O d. amounts deducted by a purchaser for defective merchandise. Gross profit margin is calculated by a. dividing operating income by net sales. O b. dividing gross profit by net sales. O c. subtracting operating income from net sales. O d. dividing net sales by gross profit. A customer may return goods as unsatisfactory or agree to keep the goods if the seller is willing to make an allowance. The sales return and allowance is a reduction of the sale. This type of account is called a(n) a. liability account b. account receivable account. O c.contra-revenue account. Od asset account