Question 1

If a company uses the direct write-off method of accounting for bad debts,

Accepted Answer

A) It establishes an estimate for the allowance for doubtful accounts. 
B) It will record bad debt expense only when an account is determined to be uncollected. 
C) It will reduce the accounts receivable account at the end of the accounting period for estimated uncollected accounts. 
D) When an account is written off, total assets will stay the same. 
A) It establishes an estimate for the allowance for doubtful accounts. 
B) It will record bad debt expense only when an account is determined to be uncollected. 
C) It will reduce the accounts receivable account at the end of the accounting period for estimated uncollected accounts. 
D) When an account is written off, total assets will stay the same. B

Question 2

Academy Grill Supply
On October 1, 2019, the company received a $50,000 promissory note from a customer. The annual interest rate is 6%. Principal and interest will be collected in cash at the maturity date of September 30, 2020.
-Refer to Academy Grill Supply. If the company's year ends December 31, 2019, an adjusting entry is needed to

Accepted Answer

A) increase interest revenue by $2,250. 
B) increase notes receivable by $750. 
C) increase interest receivable by $750. 
D) increase notes receivable by $2,250. 
A) increase interest revenue by $2,250. 
B) increase notes receivable by $750. 
C) increase interest receivable by $750. 
D) increase notes receivable by $2,250. C

Question 3

Trade receivables represent a stronger legal claim against the debtor than do non-trade receivables.

Accepted Answer

A) True 
 B)False  False

Question 4

Which one of the following is an accurate description of the Allowance for Doubtful Accounts?

Accepted Answer

A) Contra Account 
B) Liability Account 
C) Revenue Account 
D) Expense Account 
A) Contra Account 
B) Liability Account 
C) Revenue Account 
D) Expense Account

Question 5

Affinity Services Group received a 12%, 6-month promissory note with a principal amount of $10,000 from a customer for the sale of merchandise on December 1, 2019.
A)How much interest revenue will the company recognize as of December 31, 2019?
B)How much interest revenue will the company recognize in 2020?
C)Determine the total amount of cash the company will collect on the date of the note's maturity.

Accepted Answer

A)$10,000 × 12% × 1/12= $100
B

Question 6

The difference between the principal amount of a note and its maturity value is called ____________________.

Accepted Answer

The answer of The difference between the principal amount of...

Question 7

Airport Support Company reported its accounts receivable turnover ratio at 10 times. Its credit terms are 2/10, n/20. What does this ratio tell you about this company?

Accepted Answer

At an accounts receivable turnover of 10

Question 8

Data for the year ended December 31 are presented below:
  
-Refer to AT&U Company. If the company uses the aging of accounts receivable approach to estimate its bad debts, what will be the net realizable value of its accounts receivable after the adjustment for bad debt expense?

Accepted Answer

A) $640,000 
B) $595,000 
C) $620,000 
D) $615,000 
A) $640,000 
B) $595,000 
C) $620,000 
D) $615,000

Question 9

The lender of a note recognizes a note payable on the balance sheet and interest expense on its income statement.

Accepted Answer

A) True 
 B)False

Question 10

Which one of the following statements is true if a company's collection period for accounts receivable is unacceptably long?

Accepted Answer

A) The collection cost would be reduced. 
B) The company may offer sales discounts to shorten the collection period. 
C) Cash flows from operations may be higher than expected for the company's sales. 
D) The company should expand operations with its excess cash. 
A) The collection cost would be reduced. 
B) The company may offer sales discounts to shorten the collection period. 
C) Cash flows from operations may be higher than expected for the company's sales. 
D) The company should expand operations with its excess cash.

Question 11

The principal amount of a note receivable plus the interest due is referred to as the note's

Accepted Answer

A) face valve. 
B) promissory value. 
C) expected value. 
D) maturity value. 
A) face valve. 
B) promissory value. 
C) expected value. 
D) maturity value.

Question 12

Data for the year ended December 31 are presented below.Sales (100% on credit)
  
-Refer to A&B Foods. If the company estimates its bad debts at 4% of net credit sales, what amount will be reported as bad debt expense?

Accepted Answer

A) $50,000 
B) $75,000 
C) $78,000 
D) $84,000 
A) $50,000 
B) $75,000 
C) $78,000 
D) $84,000

Question 13

The accounts receivable turnover ratio is used to evaluate how well a company does in collecting its accounts receivable.

Accepted Answer

A) True 
 B)False

Question 14

On June 3, 2019, Alpine Corporation sold merchandise with a gross price of $45,000 with terms of 2/10, n/30.
Prepare the journal entries to:
A)Record the sale using the gross method.
B)Assume the payment is received on June 10, 2019.
C)Assume payment is not received until June 21, 2019.

Accepted Answer

The answer of On June 3, 2019, Alpine Corporation sold...

Question 15

A Better Mousetrap
The company sold merchandise to a customer on December 1, 2019, for $100,000. The customer paid with a promissory note that has a term of 6 months and an annual interest rate of 9%. The company's accounting period ends on December 31.
-Refer to A Better Mousetrap. What amount should the company recognize as interest revenue on December 31, 2019?

Accepted Answer

A) $ -0- 
B) $ 750 
C) $1,500 
D) $9,000 
A) $ -0- 
B) $ 750 
C) $1,500 
D) $9,000

Question 16

On January 2, Alfredo Corporation sold merchandise with a gross price of $100,000 to a customer with terms of 2/10, n/30. How much Sales Discounts would be recorded if payment was received from the customer on January 8? Assume the company uses the Gross Method of recording receivables.

Accepted Answer

A) $0 
B) $2,000 
C) $98,000 
D) $100.000 
A) $0 
B) $2,000 
C) $98,000 
D) $100.000

Question 17

The following information is available for All-4-U Company for the year ending December 31, 2019:   ​
A)Compute the gross profit ratio for 2019.
B)Compute the operating margin ratio for 2019.
C)Compute the net profit margin ratio for 2019.
D)Compute the accounts receivable turnover for 2019.

Accepted Answer

The answer of The following information is available for All-4-U...

Question 18

Net sales is total sales less sales discounts and ________________.

Accepted Answer

sales retu

Question 19

How efficiently a company is using the resources at its disposal is called ____________________.

Accepted Answer

The answer of How efficiently a company is using the...

Question 20

Because the allowance method results in better matching, accounting standards require its use rather than the direct write-off method, unless bad debts are immaterial.

Accepted Answer

A) True 
 B)False

If a company uses the direct write-off method of accounting for bad debts,

Trade receivables represent a stronger legal claim against the debtor than do non-trade receivables.

Which one of the following is an accurate description of the Allowance for Doubtful Accounts?

The difference between the principal amount of a note and its maturity value is called ____________________.

Airport Support Company reported its accounts receivable turnover ratio at 10 times. Its credit terms are 2/10, n/20. What does this ratio tell you about this company?

Data for the year ended December 31 are presented below: -Refer to AT&U Company. If the company uses the aging of accounts receivable approach to estimate its bad debts, what will be the net realizable value of its accounts receivable after the adjustment for bad debt expense?

The lender of a note recognizes a note payable on the balance sheet and interest expense on its income statement.

Which one of the following statements is true if a company's collection period for accounts receivable is unacceptably long?

The principal amount of a note receivable plus the interest due is referred to as the note's

Data for the year ended December 31 are presented below.Sales (100% on credit) -Refer to A&B Foods. If the company estimates its bad debts at 4% of net credit sales, what amount will be reported as bad debt expense?

The accounts receivable turnover ratio is used to evaluate how well a company does in collecting its accounts receivable.

On June 3, 2019, Alpine Corporation sold merchandise with a gross price of $45,000 with terms of 2/10, n/30. Prepare the journal entries to: A)Record the sale using the gross method. B)Assume the payment is received on June 10, 2019. C)Assume payment is not received until June 21, 2019.

On January 2, Alfredo Corporation sold merchandise with a gross price of $100,000 to a customer with terms of 2/10, n/30. How much Sales Discounts would be recorded if payment was received from the customer on January 8? Assume the company uses the Gross Method of recording receivables.

The following information is available for All-4-U Company for the year ending December 31, 2019: A)Compute the gross profit ratio for 2019. B)Compute the operating margin ratio for 2019. C)Compute the net profit margin ratio for 2019. D)Compute the accounts receivable turnover for 2019.

Net sales is total sales less sales discounts and ________________.

How efficiently a company is using the resources at its disposal is called ____________________.

Because the allowance method results in better matching, accounting standards require its use rather than the direct write-off method, unless bad debts are immaterial.

Accounting and The Financial Statements

The Accounting Information System

Accrual Accounting

Internal Control And Cash

Cost Of Goods Sold and Inventory

Operating Assets

Current and Contingent Liabilities

Long Term Liabilities

Stockholders Apos Equity

The Statement Of Cash Flows

Financial Statement Analysis

Finance and Stock Market Equilibrium

Filters

Exam 5: Sales And Receivables

If a company uses the direct write-off method of accounting for bad debts,

Trade receivables represent a stronger legal claim against the debtor than do non-trade receivables.

Which one of the following is an accurate description of the Allowance for Doubtful Accounts?

The difference between the principal amount of a note and its maturity value is called ____________________.

Airport Support Company reported its accounts receivable turnover ratio at 10 times. Its credit terms are 2/10, n/20. What does this ratio tell you about this company?

Data for the year ended December 31 are presented below: -Refer to AT&U Company. If the company uses the aging of accounts receivable approach to estimate its bad debts, what will be the net realizable value of its accounts receivable after the adjustment for bad debt expense?

The lender of a note recognizes a note payable on the balance sheet and interest expense on its income statement.

Which one of the following statements is true if a company's collection period for accounts receivable is unacceptably long?

The principal amount of a note receivable plus the interest due is referred to as the note's

Data for the year ended December 31 are presented below.Sales (100% on credit) -Refer to A&B Foods. If the company estimates its bad debts at 4% of net credit sales, what amount will be reported as bad debt expense?

The accounts receivable turnover ratio is used to evaluate how well a company does in collecting its accounts receivable.

On June 3, 2019, Alpine Corporation sold merchandise with a gross price of $45,000 with terms of 2/10, n/30. Prepare the journal entries to: A)Record the sale using the gross method. B)Assume the payment is received on June 10, 2019. C)Assume payment is not received until June 21, 2019.

On January 2, Alfredo Corporation sold merchandise with a gross price of $100,000 to a customer with terms of 2/10, n/30. How much Sales Discounts would be recorded if payment was received from the customer on January 8? Assume the company uses the Gross Method of recording receivables.

The following information is available for All-4-U Company for the year ending December 31, 2019: ​ A)Compute the gross profit ratio for 2019. B)Compute the operating margin ratio for 2019. C)Compute the net profit margin ratio for 2019. D)Compute the accounts receivable turnover for 2019.

Net sales is total sales less sales discounts and ________________.

How efficiently a company is using the resources at its disposal is called ____________________.

Because the allowance method results in better matching, accounting standards require its use rather than the direct write-off method, unless bad debts are immaterial.

Accounting and The Financial Statements

The Accounting Information System

Accrual Accounting

Internal Control And Cash

Cost Of Goods Sold and Inventory

Operating Assets

Current and Contingent Liabilities

Long Term Liabilities

Stockholders Apos Equity

The Statement Of Cash Flows

Financial Statement Analysis

Finance and Stock Market Equilibrium

Filters

The following information is available for All-4-U Company for the year ending December 31, 2019: A)Compute the gross profit ratio for 2019. B)Compute the operating margin ratio for 2019. C)Compute the net profit margin ratio for 2019. D)Compute the accounts receivable turnover for 2019.