Multiple choice review
1. In a well-designed sales/collection process, the customer’s credit should be evaluated:
a. As the first step.
b. Immediately after taking the customer’s order.
c. Immediately before billing the customer.
d. By the salesperson taking the order.
2. A remittance advice:
a. Is the source document used to record cash receipts from a customer.
b. Is the same as a sales invoice.
c. Is not needed if payments are accepted only with checks.
d. Is deposited in the bank.
3. Companies often rely on third-party vendors to avoid the risk of:
a. Filling orders incorrectly.
b. Selling products that are not available.
c. Granting credit to customers who are not creditworthy.
d. Billing the customer incorrectly.
4. A journal entry debits Cash and credits Accounts Receivable. Which of the following transactions is it recording?
a. A cash sale
b. Cash collected from a client
c. Cash collected as deferred revenue
d. Operating cash flow
5. All of the following are master files associated with the sales/collection process except:
a. Employee.
b. Customer.
c. Inventory.
d. Sales.
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