Question 1

When an account becomes uncollectible and must be written off,

Accepted Answer

A)  Allowance for Doubtful Accounts should be credited. 
B)  Accounts Receivable should be credited. 
C)  Bad Debt Expense should be credited. 
D)  Sales Revenue should be debited. 
A)  Allowance for Doubtful Accounts should be credited. 
B)  Accounts Receivable should be credited. 
C)  Bad Debt Expense should be credited. 
D)  Sales Revenue should be debited.

Question 2

The interest on a $10,000, 8%, 1-year note receivable is

Accepted Answer

A)  $800. 
B)  $10,000. 
C)  $10,080. 
D)  $10,800. 
A)  $800. 
B)  $10,000. 
C)  $10,080. 
D)  $10,800.

Question 3

Jack Company provides for bad debt expense at the rate of 2% of accounts receivable. The following data are available for 2018:   The Allowance for Doubtful Accounts balance at December 31, 2018, should be

Accepted Answer

A)  $3,000. 
B)  $21,000. 
C)  $27,000. 
D)  $24,000. 
A)  $3,000. 
B)  $21,000. 
C)  $27,000. 
D)  $24,000.

Question 4

The percentage of receivables basis for estimating uncollectible accounts emphasizes

Accepted Answer

A)  cash realizable value. 
B)  the relationship between accounts receivable and bad debt expense. 
C)  income statement relationships. 
D)  the relationship between sales and accounts receivable. 
A)  cash realizable value. 
B)  the relationship between accounts receivable and bad debt expense. 
C)  income statement relationships. 
D)  the relationship between sales and accounts receivable.

Question 5

The maturity value of a $70,000, 8%, 3-month note receivable is

Accepted Answer

A)  $70,467. 
B)  $70,560. 
C)  $71,400. 
D)  $75,600. 
A)  $70,467. 
B)  $70,560. 
C)  $71,400. 
D)  $75,600.

Question 6

On February 1, 2018, Fugit Company sells merchandise on account to Armen Company for $6,500. The entry to record this transaction by Fugit Company is

Accepted Answer

The answer of On February 1, 2018, Fugit Company sells...

Question 7

A note is dishonored when it is not fully paid at maturity.

Accepted Answer

A) True 
 B)False

Question 8

In 2018, Chandler Company had net credit sales of $1,125,000. On January 1, 2018, Allowance for Doubtful Accounts had a credit balance of $27,000. During 2018, $42,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage of receivables basis). If the accounts receivable balance at December 31 was $380,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2018?

Accepted Answer

A)  $23,000 
B)  $38,000 
C)  $53,000 
D)  $97,500 
A)  $23,000 
B)  $38,000 
C)  $53,000 
D)  $97,500

Question 9

On February 1, Ville Company received a $6,000, 5%, four-month note receivable. The cash to be received by Ville Company when the note becomes due is

Accepted Answer

A)  $100. 
B)  $6,000. 
C)  $6,100. 
D)  $6,300. 
A)  $100. 
B)  $6,000. 
C)  $6,100. 
D)  $6,300.

Question 10

An alternative name for Bad Debt Expense is

Accepted Answer

A)  Deadbeat Expense. 
B)  Uncollectible Accounts Expense. 
C)  Collection Expense. 
D)  Credit Loss Expense. 
A)  Deadbeat Expense. 
B)  Uncollectible Accounts Expense. 
C)  Collection Expense. 
D)  Credit Loss Expense.

Question 11

A note which is not paid on the maturity date is said to be ______________.

Accepted Answer

The answer of A note which is not paid on...

Question 12

Which permits partial derecognition of receivables?   IFRS:

Accepted Answer

The answer of Which permits partial derecognition of receivables? ...

Question 13

The percentage of receivables basis of estimating expected uncollectible accounts emphasizes income statement relationships.

Accepted Answer

A) True 
 B)False

Question 14

A promissory note

Accepted Answer

A)  is not a formal credit instrument. 
B)  may be used to settle an accounts receivable. 
C)  has the party to whom the money is due as the maker. 
D)  cannot be factored to another party. 
A)  is not a formal credit instrument. 
B)  may be used to settle an accounts receivable. 
C)  has the party to whom the money is due as the maker. 
D)  cannot be factored to another party.

Question 15

The sale of receivables by a business

Accepted Answer

A)  indicates that the business is in financial difficulty. 
B)  is generally the major revenue item on its income statement. 
C)  is an indication that the business is owned by a factor. 
D)  can be a quick way to generate cash for operating needs. 
A)  indicates that the business is in financial difficulty. 
B)  is generally the major revenue item on its income statement. 
C)  is an indication that the business is owned by a factor. 
D)  can be a quick way to generate cash for operating needs.

Question 16

An article recently appeared in the Wall Street Journal indicating that companies are selling their receivables at a record rate. Why are companies selling their receivables?

Accepted Answer

The reasons companies are selling their

Question 17

A company regularly sells its receivables to a factor who assesses a 2% service charge on the amount of receivables purchased. Which of the following statements is true for the seller of the receivables?

Accepted Answer

A)  The loss section of the income statement will increase each time receivables are sold. 
B)  The credit to Accounts Receivable is less than the debit to Cash when the accounts are sold. 
C)  Selling expenses will increase each time accounts are sold. 
D)  The other expense section of the income statement will increase each time accounts are sold. 
A)  The loss section of the income statement will increase each time receivables are sold. 
B)  The credit to Accounts Receivable is less than the debit to Cash when the accounts are sold. 
C)  Selling expenses will increase each time accounts are sold. 
D)  The other expense section of the income statement will increase each time accounts are sold.

Question 18

Presented below are various receivable transactions entered into by Beran Tool Company. Indicate whether the receivables are reported as accounts receivable, notes receivable, or other receivables on the balance sheet.
a. Loaned a company officer $5,000.
b. Accepted a $3,000 promissory note from a customer as payment on account.
c. Determined that a $10,000 income tax refund is due from the IRS.
d. Sold goods to a customer on account for $4,000.
e. Recorded $500 accrued interest on a note receivable due next year.
f. Advanced $1,400 to a trusted employee.

Accepted Answer

a. Other Receivables
b. Note R

Question 19

When customers make purchases with a national credit card, the retailer

Accepted Answer

A)  is responsible for maintaining customer accounts. 
B)  is not involved in the collection process. 
C)  absorbs any losses from uncollectible accounts. 
D)  receives cash equal to the full price of the merchandise sold from the credit card company. 
A)  is responsible for maintaining customer accounts. 
B)  is not involved in the collection process. 
C)  absorbs any losses from uncollectible accounts. 
D)  receives cash equal to the full price of the merchandise sold from the credit card company.

Question 20

Under the allowance method, writing off an uncollectible account

Accepted Answer

A)  affects only balance sheet accounts. 
B)  affects both balance sheet and income statement accounts. 
C)  affects only income statement accounts. 
D)  is not acceptable practice. 
A)  affects only balance sheet accounts. 
B)  affects both balance sheet and income statement accounts. 
C)  affects only income statement accounts. 
D)  is not acceptable practice.

When an account becomes uncollectible and must be written off,

The interest on a $10,000, 8%, 1-year note receivable is

Jack Company provides for bad debt expense at the rate of 2% of accounts receivable. The following data are available for 2018: The Allowance for Doubtful Accounts balance at December 31, 2018, should be

The percentage of receivables basis for estimating uncollectible accounts emphasizes

The maturity value of a $70,000, 8%, 3-month note receivable is

On February 1, 2018, Fugit Company sells merchandise on account to Armen Company for $6,500. The entry to record this transaction by Fugit Company is

A note is dishonored when it is not fully paid at maturity.

On February 1, Ville Company received a $6,000, 5%, four-month note receivable. The cash to be received by Ville Company when the note becomes due is

An alternative name for Bad Debt Expense is

A note which is not paid on the maturity date is said to be ______________.

Which permits partial derecognition of receivables? IFRS:

The percentage of receivables basis of estimating expected uncollectible accounts emphasizes income statement relationships.

A promissory note

The sale of receivables by a business

An article recently appeared in the Wall Street Journal indicating that companies are selling their receivables at a record rate. Why are companies selling their receivables?

A company regularly sells its receivables to a factor who assesses a 2% service charge on the amount of receivables purchased. Which of the following statements is true for the seller of the receivables?

When customers make purchases with a national credit card, the retailer

Under the allowance method, writing off an uncollectible account

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions

Statement of Cash Flows

Financial Statement Analysis

Specimen Financial Statements: Apple Inc

Specimen Financial Statements: Pepsico, Inc

Specimen Financial Statements: the Coca-Cola Company

Specimen Financial Statements: Amazoncom, Inc

Specimen Financial Statements: Wal-Mart Stores, Inc

Filters

Exam 8: Accounting for Receivables

When an account becomes uncollectible and must be written off,

The interest on a $10,000, 8%, 1-year note receivable is

Jack Company provides for bad debt expense at the rate of 2% of accounts receivable. The following data are available for 2018: The Allowance for Doubtful Accounts balance at December 31, 2018, should be

The percentage of receivables basis for estimating uncollectible accounts emphasizes

The maturity value of a $70,000, 8%, 3-month note receivable is

On February 1, 2018, Fugit Company sells merchandise on account to Armen Company for $6,500. The entry to record this transaction by Fugit Company is

A note is dishonored when it is not fully paid at maturity.

On February 1, Ville Company received a $6,000, 5%, four-month note receivable. The cash to be received by Ville Company when the note becomes due is

An alternative name for Bad Debt Expense is

A note which is not paid on the maturity date is said to be ______________.

Which permits partial derecognition of receivables? IFRS:

The percentage of receivables basis of estimating expected uncollectible accounts emphasizes income statement relationships.

A promissory note

The sale of receivables by a business

An article recently appeared in the Wall Street Journal indicating that companies are selling their receivables at a record rate. Why are companies selling their receivables?

A company regularly sells its receivables to a factor who assesses a 2% service charge on the amount of receivables purchased. Which of the following statements is true for the seller of the receivables?

When customers make purchases with a national credit card, the retailer

Under the allowance method, writing off an uncollectible account

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions

Statement of Cash Flows

Financial Statement Analysis

Specimen Financial Statements: Apple Inc

Specimen Financial Statements: Pepsico, Inc

Specimen Financial Statements: the Coca-Cola Company

Specimen Financial Statements: Amazoncom, Inc

Specimen Financial Statements: Wal-Mart Stores, Inc

Filters