Question 1

Sales discounts are deducted from sales in the calculation of net sales.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following transactions will result in an increase in the receivables turnover ratio?

Accepted Answer

A) The journal entry to record bad debt expense. 
B) Writing off an uncollectible account receivable. 
C) Selling inventory on account. 
D) Purchasing inventory on account. 
A) The journal entry to record bad debt expense. 
B) Writing off an uncollectible account receivable. 
C) Selling inventory on account. 
D) Purchasing inventory on account.

Question 3

Credit card discounts are reported as operating expenses on an income statement.

Accepted Answer

A) True 
 B)False

Question 4

Gross profit decreases when sales discounts increase.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following accounts is not a contra-revenue account?

Accepted Answer

A) Sales discounts 
B) Credit card discounts 
C) Sales returns and allowances 
D) Allowance for doubtful accounts 
A) Sales discounts 
B) Credit card discounts 
C) Sales returns and allowances 
D) Allowance for doubtful accounts

Question 6

The Ward Company has provided the following information: • Net sales totaled $750,000.
• Beginning net accounts receivable was $65,000.
• Ending net accounts receivable was $85,000.
-
What was Ward's average collection period? (Use 365 days a year)

Accepted Answer

A) 73.0 days. 
B) 41.8 days. 
C) 31.6 days. 
D) 36.5 days. 
A) 73.0 days. 
B) 41.8 days. 
C) 31.6 days. 
D) 36.5 days.

Question 7

Which of the following transactions will result in a decrease in the receivables turnover ratio?

Accepted Answer

A) The journal entry to record bad debt expense. 
B) Writing off an uncollectible account receivable. 
C) Selling inventory on account. 
D) Collecting an account receivable. 
A) The journal entry to record bad debt expense. 
B) Writing off an uncollectible account receivable. 
C) Selling inventory on account. 
D) Collecting an account receivable.

Question 8

Dillon Company uses the allowance method to account for bad debts.The entry to write off a bad account (one that will never be collected)should be:

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 9

When using an allowance for doubtful accounts and a particular account receivable is determined to be uncollectible,the journal entry to write off the account reduces net income.

Accepted Answer

A) True 
 B)False

Question 10

Clark Company estimated the net realizable value of its accounts receivable as of December 31,2019,to be $165,000,based on an aging schedule of accounts receivable.Clark has also provided the following information: • The accounts receivable balance on December 31,2019 was $175,000.
• Uncollectible accounts receivable written off during 2019 totaled $12,000.
• The allowance for doubtful accounts balance on January 1,2019 was $15,000.
How much is Clark's 2019 bad debt expense?

Accepted Answer

A) $10,000. 
B) $7,000. 
C) $13,000. 
D) $3,000. 
A) $10,000. 
B) $7,000. 
C) $13,000. 
D) $3,000.

Question 11

Merchandise was sold on credit for $10,000,terms 2/10,n/30.Which of the following journal entry descriptions correctly describes the cash collection?

Accepted Answer

A) Cash is debited for $10,000 and accounts receivable is credited for $10,000 if the collection is within the discount period. 
B) Cash is debited for $10,000,accounts receivable is credited for $9,800,and sales discounts is credited for $200 if the collection is within the discount period. 
C) Cash is debited for $10,000,accounts receivable is credited for $9,800,and sales discounts is credited for $200 if the collection is after the discount period. 
D) Cash is debited for $10,000 and accounts receivable is credited for $10,000 if the collection is after the discount period. 
A) Cash is debited for $10,000 and accounts receivable is credited for $10,000 if the collection is within the discount period. 
B) Cash is debited for $10,000,accounts receivable is credited for $9,800,and sales discounts is credited for $200 if the collection is within the discount period. 
C) Cash is debited for $10,000,accounts receivable is credited for $9,800,and sales discounts is credited for $200 if the collection is after the discount period. 
D) Cash is debited for $10,000 and accounts receivable is credited for $10,000 if the collection is after the discount period.

Question 12

Select the appropriate answer choice A through G (listed below)to correspond with the following numbered items on a bank reconciliation.There may be more than one letter selection for the numbered item.
   Items:
A.Checks written during June that had not cleared the bank by June 30.
B.Bank service charges for June,which were not known until the June 30th bank statement arrived.
C.Deposit made on June 30 that did not reach the bank until July 1.
D.Upon reviewing the company's cash receipts book after June 30,it was discovered the accounting clerk had neglected to post one receipt to the cash account.
E.The bank statement reported a "NSF check" during June.
F.The bank incorrectly deducted the check of another company to the bank account during June.
G.The company was paid interest on its account by the bank.

Accepted Answer

(1. )C and

Question 13

Which of the following is not a component of the gross profit calculation?

Accepted Answer

A) Cost of sales. 
B) Sales returns and allowances. 
C) Allowance for doubtful accounts. 
D) Credit card discounts. 
A) Cost of sales. 
B) Sales returns and allowances. 
C) Allowance for doubtful accounts. 
D) Credit card discounts.

Question 14

Sabre Company sold inventory costing $600 to a customer on account for $900 with terms of 3/15,n/30.Which of the following is not correct?

Accepted Answer

A) Gross profit increases $300 on the date of sale. 
B) Total current assets are not affected on the date of cash collection if the customer pays 30 days after the date of sale. 
C) Total current assets increase $27 on the date of cash collection if the customer pays within 15 days of the date of sale. 
D) Gross profit and net sales both decrease $27 on the date of cash collection if the customer pays within 15 days of the date of sale. 
A) Gross profit increases $300 on the date of sale. 
B) Total current assets are not affected on the date of cash collection if the customer pays 30 days after the date of sale. 
C) Total current assets increase $27 on the date of cash collection if the customer pays within 15 days of the date of sale. 
D) Gross profit and net sales both decrease $27 on the date of cash collection if the customer pays within 15 days of the date of sale.

Question 15

Josephine sells organic,GMO-free pecans in the United States,Canada,and Europe.Recently Josephine made the following two sales.Prepare the entries required on Josephine's books to record these sales.
February
Sold 3,500 pounds of pecans on account to Tinder,a German company.Tinder agreed to pay €14,000.On the sale date,each Euro was worth US$1.35.
March
Sold 4,000 pounds of pecans on account to Charlie Co. ,an English company.Charlie agreed to pay £24,800.On the sale date,each British pound was worth US$.98.

Accepted Answer

February Accounts recei

Question 16

Indicate whether each of the accounts listed below normally will have a debit balance or a credit balance.Record your answer to the left of each account by entering either Dr or Cr.

Accepted Answer

1.Cr;2.Dr;

Question 17

The accounts receivable aging schedule determines the dollar amount of uncollectible accounts receivable at year-end;this dollar amount of uncollectible accounts receivable is the bad debt expense that is recorded for the year regardless of the existing balance in the allowance for doubtful accounts.

Accepted Answer

A) True 
 B)False

Question 18

The journal entry to record bad debt expense is made during the year in which it is determined that a particular receivable is uncollectible,regardless of the year of sale.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is correct?

Accepted Answer

A) The journal entry to record bad debt expense requires a debit to bad debt expense and a credit to accounts receivable. 
B) The journal entry to record bad debt expense requires a debit to bad debt expense and a credit to allowance for doubtful accounts. 
C) The journal entry to record the write off of an uncollectible account receivable requires a debit to bad debt expense and a credit to accounts receivable. 
D) The journal entry to record the write off of an uncollectible account receivable requires a debit to bad debt expense and a credit to allowance for doubtful accounts. 
A) The journal entry to record bad debt expense requires a debit to bad debt expense and a credit to accounts receivable. 
B) The journal entry to record bad debt expense requires a debit to bad debt expense and a credit to allowance for doubtful accounts. 
C) The journal entry to record the write off of an uncollectible account receivable requires a debit to bad debt expense and a credit to accounts receivable. 
D) The journal entry to record the write off of an uncollectible account receivable requires a debit to bad debt expense and a credit to allowance for doubtful accounts.

Question 20

Which of the following statements correctly describes the effect of recording the collection of a $10,000 account receivable for which a 2% sales discount was recorded at the time of collection?

Accepted Answer

A) Current assets will remain the same. 
B) Gross profit will decrease $200. 
C) Accounts receivable will decrease $9,800. 
D) Net sales will increase $9,800. 
A) Current assets will remain the same. 
B) Gross profit will decrease $200. 
C) Accounts receivable will decrease $9,800. 
D) Net sales will increase $9,800.

Sales discounts are deducted from sales in the calculation of net sales.

Which of the following transactions will result in an increase in the receivables turnover ratio?

Credit card discounts are reported as operating expenses on an income statement.

Gross profit decreases when sales discounts increase.

Which of the following accounts is not a contra-revenue account?

The Ward Company has provided the following information: • Net sales totaled $750,000. • Beginning net accounts receivable was $65,000. • Ending net accounts receivable was $85,000. - What was Ward's average collection period? (Use 365 days a year)

Which of the following transactions will result in a decrease in the receivables turnover ratio?

Dillon Company uses the allowance method to account for bad debts.The entry to write off a bad account (one that will never be collected)should be:

When using an allowance for doubtful accounts and a particular account receivable is determined to be uncollectible,the journal entry to write off the account reduces net income.

Merchandise was sold on credit for $10,000,terms 2/10,n/30.Which of the following journal entry descriptions correctly describes the cash collection?

Which of the following is not a component of the gross profit calculation?

Sabre Company sold inventory costing $600 to a customer on account for $900 with terms of 3/15,n/30.Which of the following is not correct?

Indicate whether each of the accounts listed below normally will have a debit balance or a credit balance.Record your answer to the left of each account by entering either Dr or Cr.

The journal entry to record bad debt expense is made during the year in which it is determined that a particular receivable is uncollectible,regardless of the year of sale.

Which of the following statements is correct?

Which of the following statements correctly describes the effect of recording the collection of a $10,000 account receivable for which a 2% sales discount was recorded at the time of collection?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments,financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property,plant,and Equipment;intangibles;and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

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Exam 6: Reporting and Interpreting Sales Revenue,receivables,and Cash

Sales discounts are deducted from sales in the calculation of net sales.

Which of the following transactions will result in an increase in the receivables turnover ratio?

Credit card discounts are reported as operating expenses on an income statement.

Gross profit decreases when sales discounts increase.

Which of the following accounts is not a contra-revenue account?

The Ward Company has provided the following information: • Net sales totaled $750,000. • Beginning net accounts receivable was $65,000. • Ending net accounts receivable was $85,000. - What was Ward's average collection period? (Use 365 days a year)

Which of the following transactions will result in a decrease in the receivables turnover ratio?

Dillon Company uses the allowance method to account for bad debts.The entry to write off a bad account (one that will never be collected)should be:

When using an allowance for doubtful accounts and a particular account receivable is determined to be uncollectible,the journal entry to write off the account reduces net income.

Merchandise was sold on credit for $10,000,terms 2/10,n/30.Which of the following journal entry descriptions correctly describes the cash collection?

Which of the following is not a component of the gross profit calculation?

Sabre Company sold inventory costing $600 to a customer on account for $900 with terms of 3/15,n/30.Which of the following is not correct?

Indicate whether each of the accounts listed below normally will have a debit balance or a credit balance.Record your answer to the left of each account by entering either Dr or Cr.

The journal entry to record bad debt expense is made during the year in which it is determined that a particular receivable is uncollectible,regardless of the year of sale.

Which of the following statements is correct?

Which of the following statements correctly describes the effect of recording the collection of a $10,000 account receivable for which a 2% sales discount was recorded at the time of collection?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments,financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property,plant,and Equipment;intangibles;and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

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