Question 1

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 2

The account Allowance for Doubtful Accounts is closed out at the end of the year.

Accepted Answer

A) True 
 B)False

Question 3

When calculating interest on a promissory note with the maturity date stated in terms of days, the

Accepted Answer

A) maker pays more interest if 365 days are used instead of 360. 
B) maker pays the same interest regardless if 365 or 360 days are used. 
C) payee receives more interest if 360 days are used instead of 365. 
D) payee receives less interest if 360 days are used instead of 365. 
A) maker pays more interest if 365 days are used instead of 360. 
B) maker pays the same interest regardless if 365 or 360 days are used. 
C) payee receives more interest if 360 days are used instead of 365. 
D) payee receives less interest if 360 days are used instead of 365.

Question 4

An aging of a company's accounts receivable indicates that $5,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $900 credit balance, the adjustment to record bad debts for the period will require a

Accepted Answer

A) debit to Bad Debt Expense for $5,000. 
B) debit to Allowance for Doubtful Accounts for $4,100. 
C) debit to Bad Debt Expense for $4,100. 
D) credit to Allowance for Doubtful Accounts for $5,000. 
A) debit to Bad Debt Expense for $5,000. 
B) debit to Allowance for Doubtful Accounts for $4,100. 
C) debit to Bad Debt Expense for $4,100. 
D) credit to Allowance for Doubtful Accounts for $5,000.

Question 5

The financial statements of Danielle Manufacturing Company report net sales of $750,000 and accounts receivable of $60,000 and $90,000 at the beginning and end of the year, respectively. What is the accounts receivable turnover for Danielle?

Accepted Answer

A) 5 times 
B) 8.3 times 
C) 10 times 
D) 12.5 times 
A) 5 times 
B) 8.3 times 
C) 10 times 
D) 12.5 times

Question 6

The direct write-off method of accounting for bad debts

Accepted Answer

A) uses an allowance account. 
B) uses a contra-asset account. 
C) does not require estimates of bad debt losses. 
D) is the preferred method under generally accepted accounting principles. 
A) uses an allowance account. 
B) uses a contra-asset account. 
C) does not require estimates of bad debt losses. 
D) is the preferred method under generally accepted accounting principles.

Question 7

A 60-day note receivable dated July 13 has a maturity date of

Accepted Answer

A) September 12. 
B) September 11. 
C) September 10. 
D) September 13. 
A) September 12. 
B) September 11. 
C) September 10. 
D) September 13.

Question 8

Interest is usually associated with

Accepted Answer

A) accounts receivable. 
B) notes receivable. 
C) doubtful accounts. 
D) bad debts. 
A) accounts receivable. 
B) notes receivable. 
C) doubtful accounts. 
D) bad debts.

Question 9

The entry to record the dishonor of a note receivable assuming the payee expects eventual collection includes a debit to

Accepted Answer

A) Notes Receivable. 
B) Cash. 
C) Allowance for Doubtful Accounts. 
D) Accounts Receivable. 
A) Notes Receivable. 
B) Cash. 
C) Allowance for Doubtful Accounts. 
D) Accounts Receivable.

Question 10

The net amount expected to be received in cash from receivables is termed the

Accepted Answer

A) cash realizable value. 
B) cash-good value. 
C) gross cash value. 
D) cash-equivalent value. 
A) cash realizable value. 
B) cash-good value. 
C) gross cash value. 
D) cash-equivalent value.

Question 11

An aging schedule is prepared only for old accounts receivables that have been past due for more than one year.

Accepted Answer

A) True 
 B)False

Question 12

Two bases for estimating uncollectible accounts are:

Accepted Answer

A) percentage of assets and percentage of sales. 
B) percentage of receivables and percentage of total revenue. 
C) percentage of current assets and percentage of sales. 
D) percentage of receivables and percentage of sales. 
A) percentage of assets and percentage of sales. 
B) percentage of receivables and percentage of total revenue. 
C) percentage of current assets and percentage of sales. 
D) percentage of receivables and percentage of sales.

Question 13

The percentage of sales basis of estimating expected uncollectibles

Accepted Answer

A) emphasizes the matching of expenses with revenues. 
B) emphasizes balance sheet relationships. 
C) emphasizes cash realizable value. 
D) is not generally accepted as a basis for estimating bad debts. 
A) emphasizes the matching of expenses with revenues. 
B) emphasizes balance sheet relationships. 
C) emphasizes cash realizable value. 
D) is not generally accepted as a basis for estimating bad debts.

Question 14

Other receivables include nontrade receivables such as loans to company officers.

Accepted Answer

A) True 
 B)False

Question 15

In 2015, Boyle Company had credit sales of $1,080,000 and granted sales discounts of $24,000. On January 1, 2015, Allowance for Doubtful Accounts had a credit balance of $26,400. During 2015, $45,000 of uncollectible accounts receivable were written off. Past experience indicates that 3% of net credit sales become uncollectible. What should be the adjusted balance of Allowance for Doubtful Accounts at December 31, 2015?

Accepted Answer

A) $13,080 
B) $13,800 
C) $31,680 
D) $39,720 
A) $13,080 
B) $13,800 
C) $31,680 
D) $39,720

Question 16

Jeff Retailers accepted $75,000 of Citibank Visa credit card charges for merchandise sold on July 1. Citibank charges 2% for its credit card use. The entry to record this transaction by Jeff Retailers will include a credit to Sales Revenue of $75,000 and a debit(s) to

Accepted Answer

A) Cash $73,500 and Service Charge Expense $1,500. 
B) Accounts Receivable $73,500 and Service Charge Expense $1,500. 
C) Cash $73,500 and Interest Expense $1,500. 
D) Accounts Receivable $75,000. 
A) Cash $73,500 and Service Charge Expense $1,500. 
B) Accounts Receivable $73,500 and Service Charge Expense $1,500. 
C) Cash $73,500 and Interest Expense $1,500. 
D) Accounts Receivable $75,000.

Question 17

The face value of a note refers to the amount

Accepted Answer

A) that can be received if sold to a factor. 
B) borrowed plus interest received at maturity from the maker. 
C) that is identified on the formal instrument of credit. 
D) remaining after a service charge has been deducted. 
A) that can be received if sold to a factor. 
B) borrowed plus interest received at maturity from the maker. 
C) that is identified on the formal instrument of credit. 
D) remaining after a service charge has been deducted.

Question 18

Claims for which formal instruments of credit are issued as proof of the debt are

Accepted Answer

A) accounts receivable. 
B) interest receivable. 
C) notes receivable. 
D) other receivables. 
A) accounts receivable. 
B) interest receivable. 
C) notes receivable. 
D) other receivables.

Question 19

Allowance for Doubtful Accounts on the balance sheet

Accepted Answer

A) is offset against total current assets. 
B) increases the cash realizable value of accounts receivable. 
C) appears under the heading "Other Assets." 
D) is offset against accounts receivable. 
A) is offset against total current assets. 
B) increases the cash realizable value of accounts receivable. 
C) appears under the heading "Other Assets." 
D) is offset against accounts receivable.

Question 20

When an account is written off using the allowance method, accounts receivable

Accepted Answer

A) is unchanged and the allowance account increases. 
B) increases and the allowance account increases. 
C) decreases and the allowance account decreases. 
D) decreases and the allowance account increases. 
A) is unchanged and the allowance account increases. 
B) increases and the allowance account increases. 
C) decreases and the allowance account decreases. 
D) decreases and the allowance account increases.

The sale of receivables by a business

The account Allowance for Doubtful Accounts is closed out at the end of the year.

When calculating interest on a promissory note with the maturity date stated in terms of days, the

An aging of a company's accounts receivable indicates that $5,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $900 credit balance, the adjustment to record bad debts for the period will require a

The financial statements of Danielle Manufacturing Company report net sales of $750,000 and accounts receivable of $60,000 and $90,000 at the beginning and end of the year, respectively. What is the accounts receivable turnover for Danielle?

The direct write-off method of accounting for bad debts

A 60-day note receivable dated July 13 has a maturity date of

Interest is usually associated with

The entry to record the dishonor of a note receivable assuming the payee expects eventual collection includes a debit to

The net amount expected to be received in cash from receivables is termed the

An aging schedule is prepared only for old accounts receivables that have been past due for more than one year.

Two bases for estimating uncollectible accounts are:

The percentage of sales basis of estimating expected uncollectibles

Other receivables include nontrade receivables such as loans to company officers.

Jeff Retailers accepted $75,000 of Citibank Visa credit card charges for merchandise sold on July 1. Citibank charges 2% for its credit card use. The entry to record this transaction by Jeff Retailers will include a credit to Sales Revenue of $75,000 and a debit(s) to

The face value of a note refers to the amount

Claims for which formal instruments of credit are issued as proof of the debt are

Allowance for Doubtful Accounts on the balance sheet

When an account is written off using the allowance method, accounts receivable

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, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

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Exam 8: Accounting for Receivables

The sale of receivables by a business

The account Allowance for Doubtful Accounts is closed out at the end of the year.

When calculating interest on a promissory note with the maturity date stated in terms of days, the

An aging of a company's accounts receivable indicates that $5,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $900 credit balance, the adjustment to record bad debts for the period will require a

The financial statements of Danielle Manufacturing Company report net sales of $750,000 and accounts receivable of $60,000 and $90,000 at the beginning and end of the year, respectively. What is the accounts receivable turnover for Danielle?

The direct write-off method of accounting for bad debts

A 60-day note receivable dated July 13 has a maturity date of

Interest is usually associated with

The entry to record the dishonor of a note receivable assuming the payee expects eventual collection includes a debit to

The net amount expected to be received in cash from receivables is termed the

An aging schedule is prepared only for old accounts receivables that have been past due for more than one year.

Two bases for estimating uncollectible accounts are:

The percentage of sales basis of estimating expected uncollectibles

Other receivables include nontrade receivables such as loans to company officers.

Jeff Retailers accepted $75,000 of Citibank Visa credit card charges for merchandise sold on July 1. Citibank charges 2% for its credit card use. The entry to record this transaction by Jeff Retailers will include a credit to Sales Revenue of $75,000 and a debit(s) to

The face value of a note refers to the amount

Claims for which formal instruments of credit are issued as proof of the debt are

Allowance for Doubtful Accounts on the balance sheet

When an account is written off using the allowance method, accounts receivable

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, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Filters