Question 1

The difference between the balance in Accounts Receivable and the balance in the Allowance for Doubtful Accounts is called the net realizable value of the receivables.

Accepted Answer

A) True 
 B)False

Question 2

Discuss the two methods for recording bad debt expense. What type of company uses each method?

Accepted Answer

The first method is the direct write-off

Question 3

Match each description to the appropriate term a-i).
-Operating expense recorded as a result of receivables becoming uncollectible

Accepted Answer

A) Accounts receivable turnover 
B) Net realizable value 
C) Accounts receivable 
D) Aging report 
E) Receivables
F)Direct write-off method
G)Allowance for doubtful accounts
H)Bad debt expense
I)Factoring 
A) Accounts receivable turnover 
B) Net realizable value 
C) Accounts receivable 
D) Aging report 
E) Receivables
F)Direct write-off method
G)Allowance for doubtful accounts
H)Bad debt expense
I)Factoring

Question 4

Match each description to the appropriate term a-d). Each term may be used more than once.
-This method is most often used by small companies with few receivables.

Accepted Answer

A) Direct write-off method 
B) Aging of receivables method 
C) Percent of sales method 
D) Allowance method 
A) Direct write-off method 
B) Aging of receivables method 
C) Percent of sales method 
D) Allowance method

Question 5

The interest on a 6%, 60-day note for $5,000 is $300.

Accepted Answer

A) True 
 B)False

Question 6

The balance in Allowance for Doubtful Accounts at the end of the year includes the total of all accounts written off since the beginning of the year.

Accepted Answer

A) True 
 B)False

Question 7

If a promissory note is dishonored, the payee should still record interest revenue.

Accepted Answer

A) True 
 B)False

Question 8

Allowance for Doubtful Accounts is classified as an) and has a normal balance.

Accepted Answer

A)  owners' equity, credit 
B)  contra asset, debit 
C)  owners' equity, debit 
D)  contra asset, credit 
A)  owners' equity, credit 
B)  contra asset, debit 
C)  owners' equity, debit 
D)  contra asset, credit

Question 9

Journalize the following transactions for the Scott Company:
November 4 Received a $6,500, 90-day, 6% note from Michael Tim's in payment of his account. December 31 Accrued interest on the Tim's note.
February 2 Received the amount due from Tim's on his note.

Accepted Answer

@#IMG-DLM& $6,500 × 6% × 57/36

Question 10

The accounts receivable turnover measures the length of time in days it takes to collect a receivable.

Accepted Answer

A) True 
 B)False

Question 11

Fill in the blanks related to the characteristics of a promissory note.
1. The party promising to pay the note is called the .
2. The amount for which the note is written is called the amount.
3. The date the note is to be paid is the date.
4. The time between the date when a note is written and the time it must be paid is called the of the note

Accepted Answer

1 maker
2.

Question 12

The accounts receivable turnover measures

Accepted Answer

A)  how frequently during the year the accounts receivable are converted to cash 
B)  the number of days of accounts receivable outstanding 
C)  the fair market value of accounts receivable 
D)  the efficiency of the accounts payable function 
A)  how frequently during the year the accounts receivable are converted to cash 
B)  the number of days of accounts receivable outstanding 
C)  the fair market value of accounts receivable 
D)  the efficiency of the accounts payable function

Question 13

Trade receivables occur when two companies trade or exchange notes receivables.

Accepted Answer

A) True 
 B)False

Question 14

An aging of a company's accounts receivable indicates that the estimate of uncollectible accounts totals $6,400. If Allowance for Doubtful Accounts has a $1,300 debit balance, the adjustment to record the bad debt expense for the period will require a

Accepted Answer

A)  debit to Bad Debt Expense for $7,700 
B)  debit to Bad Debt Expense for $6,400 
C)  debit to Bad Debt expense for $5,100 
D)  credit to Allowance for Doubtful Accounts for $1,300 
A)  debit to Bad Debt Expense for $7,700 
B)  debit to Bad Debt Expense for $6,400 
C)  debit to Bad Debt expense for $5,100 
D)  credit to Allowance for Doubtful Accounts for $1,300

Question 15

Using the allowance method of accounting for uncollectible receivables, the entry to reinstate a specific receivable previously written off would include a

Accepted Answer

A)  credit to Bad Debt Expense 
B)  credit to Accounts Receivable 
C)  debit to Allowance for Doubtful Accounts 
D)  debit to Accounts Receivable 
A)  credit to Bad Debt Expense 
B)  credit to Accounts Receivable 
C)  debit to Allowance for Doubtful Accounts 
D)  debit to Accounts Receivable

Question 16

When an account receivable that has been written off is subsequently collected, the account receivable must first be reinstated before recording the receipt of payment.

Accepted Answer

A) True 
 B)False

Question 17

An aging of a company's accounts receivable indicates that the estimate of the uncollectible accounts totals $4,000. If Allowance for Doubtful Accounts has a $800 credit balance, the adjustment to record the bad debt expense for the period will require a

Accepted Answer

A)  debit to Allowance for Doubtful Accounts for $3,200 
B)  debit to Bad Debt Expense for $3,200 
C)  debit to Allowance for Doubtful Accounts for $4,000 
D)  credit to Allowance for Doubtful Accounts for $4,000 
A)  debit to Allowance for Doubtful Accounts for $3,200 
B)  debit to Bad Debt Expense for $3,200 
C)  debit to Allowance for Doubtful Accounts for $4,000 
D)  credit to Allowance for Doubtful Accounts for $4,000

Question 18

Indications that an account may be uncollectible include all of the following except

Accepted Answer

A)  the customer closes its business 
B)  the customer is making small but regular payments 
C)  the customer files for bankruptcy 
D)  the customer cannot be located 
A)  the customer closes its business 
B)  the customer is making small but regular payments 
C)  the customer files for bankruptcy 
D)  the customer cannot be located

Question 19

Under the allowance method, when a year-end adjustment is made for estimated uncollectible accounts

Accepted Answer

A)  liabilities decrease 
B)  net income is unchanged 
C)  total assets are unchanged 
D)  total assets decrease 
A)  liabilities decrease 
B)  net income is unchanged 
C)  total assets are unchanged 
D)  total assets decrease

Question 20

Fellows Corporation has determined that the $2,700 accounts receivable due from Andrew Stevens is uncollectible. Compare the journal entry that is required under the direct write-off method to the journal entry that is required using the allowance method.

Accepted Answer

Under the direct write-off method, Bad D

Exam 8: Receivables

The difference between the balance in Accounts Receivable and the balance in the Allowance for Doubtful Accounts is called the net realizable value of the receivables.

Discuss the two methods for recording bad debt expense. What type of company uses each method?

Match each description to the appropriate term a-i). -Operating expense recorded as a result of receivables becoming uncollectible

Match each description to the appropriate term a-d). Each term may be used more than once. -This method is most often used by small companies with few receivables.

The interest on a 6%, 60-day note for $5,000 is $300.

The balance in Allowance for Doubtful Accounts at the end of the year includes the total of all accounts written off since the beginning of the year.

If a promissory note is dishonored, the payee should still record interest revenue.

Allowance for Doubtful Accounts is classified as an) and has a normal balance.

Journalize the following transactions for the Scott Company: November 4 Received a $6,500, 90-day, 6% note from Michael Tim's in payment of his account. December 31 Accrued interest on the Tim's note. February 2 Received the amount due from Tim's on his note.

The accounts receivable turnover measures the length of time in days it takes to collect a receivable.

The accounts receivable turnover measures

Trade receivables occur when two companies trade or exchange notes receivables.

An aging of a company's accounts receivable indicates that the estimate of uncollectible accounts totals $6,400. If Allowance for Doubtful Accounts has a $1,300 debit balance, the adjustment to record the bad debt expense for the period will require a

Using the allowance method of accounting for uncollectible receivables, the entry to reinstate a specific receivable previously written off would include a

When an account receivable that has been written off is subsequently collected, the account receivable must first be reinstated before recording the receipt of payment.

An aging of a company's accounts receivable indicates that the estimate of the uncollectible accounts totals $4,000. If Allowance for Doubtful Accounts has a $800 credit balance, the adjustment to record the bad debt expense for the period will require a

Indications that an account may be uncollectible include all of the following except

Under the allowance method, when a year-end adjustment is made for estimated uncollectible accounts

Fellows Corporation has determined that the $2,700 accounts receivable due from Andrew Stevens is uncollectible. Compare the journal entry that is required under the direct write-off method to the journal entry that is required using the allowance method.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Lean Principles, Lean Accounting, and Activity Analysis

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