Study Guide: Accounts Receivable 
True / False Questions 1. Credit sales transfer products and services to a customer today while bearing the risk of collecting payment from that customer in the future.
True False 2. At the time of a credit sale, a company would record an increase in assets and an increase in revenues.
True False 3. A sale on account is recorded as a debit to revenue and a credit to accounts receivable.
True False 4. Accounts receivable represent the amount of cash owed to the company by its customers from the sale of products or services on account.
True False 5. Trade discounts represent a discount offered to the purchasers for quick payment.
True False 6. When a company sells a $100 service with a 20% trade discount, $80 of revenue is recognized.
True False 7. A sales discount represents a reduction, not in the selling price of a product or service, but in the amount to be paid by a credit customer if payment is made within a specified period of time.
True False
8. A sale on account for $1,000 offered with terms 2/10 means that the customers will get a $2 discount if payment is made within 10 days.
True False 9. The sales discount account is an example of a contra revenue account.
True False 10. The sales discount account is an expense account.
True False 11. Sales returns and allowances occur when the buyer returns the goods or the seller reduces the customer's balance owed.
True False 12. A sales allowance is recorded as a debit to accounts receivable and credit to sales allowance.
True False 13. The sales returns and allowances account is an expense account.
True False 14. If a company has total revenues of $100,000, sales discounts of $3,000, sales returns of $4,000, and sales allowances of $2,000, the income statement will report net revenues of $91,000.
True False 15. Accounts receivable are reported at their net realizable value.
True False
16. The net realizable value of
True False 2. At the time of a credit sale, a company would record an increase in assets and an increase in revenues.
True False 3. A sale on account is recorded as a debit to revenue and a credit to accounts receivable.
True False 4. Accounts receivable represent the amount of cash owed to the company by its customers from the sale of products or services on account.
True False 5. Trade discounts represent a discount offered to the purchasers for quick payment.
True False 6. When a company sells a $100 service with a 20% trade discount, $80 of revenue is recognized.
True False 7. A sales discount represents a reduction, not in the selling price of a product or service, but in the amount to be paid by a credit customer if payment is made within a specified period of time.
True False
8. A sale on account for $1,000 offered with terms 2/10 means that the customers will get a $2 discount if payment is made within 10 days.
True False 9. The sales discount account is an example of a contra revenue account.
True False 10. The sales discount account is an expense account.
True False 11. Sales returns and allowances occur when the buyer returns the goods or the seller reduces the customer's balance owed.
True False 12. A sales allowance is recorded as a debit to accounts receivable and credit to sales allowance.
True False 13. The sales returns and allowances account is an expense account.
True False 14. If a company has total revenues of $100,000, sales discounts of $3,000, sales returns of $4,000, and sales allowances of $2,000, the income statement will report net revenues of $91,000.
True False 15. Accounts receivable are reported at their net realizable value.
True False
16. The net realizable value of