Question 1

Which of the following statements concerning receivables is incorrect?

Accepted Answer

A) Notes receivable are often listed last under receivables. 
B) The contingent liability from selling notes receivable should be disclosed. 
C) Both the gross amount of receivables and the allowance for doubtful accounts should be reported. 
D) Interest revenue and gain on sale of notes receivable are shown under other revenues and gains. 
A) Notes receivable are often listed last under receivables. 
B) The contingent liability from selling notes receivable should be disclosed. 
C) Both the gross amount of receivables and the allowance for doubtful accounts should be reported. 
D) Interest revenue and gain on sale of notes receivable are shown under other revenues and gains.

Question 2

During 2015, Alfred Inc. had sales on account of $198,000, cash sales of $81,000, and collections on account of $126,000. In addition, they collected $2,175 which had been written off as uncollectible in 2014. As a result of these transactions, the change in the accounts receivable balance indicates a

Accepted Answer

A) $69,825 increase. 
B) $72,000 increase. 
C) $150,825 increase. 
D) $153,000 increase. 
A) $69,825 increase. 
B) $72,000 increase. 
C) $150,825 increase. 
D) $153,000 increase.

Question 3

The existing balance in Allowance for Doubtful Accounts is considered in computing bad debt expense in the

Accepted Answer

A) direct write-off method. 
B) percentage of receivables basis. 
C) percentage of sales basis. 
D) percentage of receivables and percentage of sales basis. 
A) direct write-off method. 
B) percentage of receivables basis. 
C) percentage of sales basis. 
D) percentage of receivables and percentage of sales basis.

Question 4

Lifetime sells softball equipment. On November 14, they shipped $3,000 worth of softball uniforms to Palos Middle School, terms 2/10, n/30. On November 21, they received an order from Tinley High School for $1,800 worth of custom printed bats to be produced in December. On November 30, Palos Middle School returned $300 of defective merchandise. Lifetime has received no payments from either school as of month end. What amount will be recognized as net accounts receivable on the balance sheet as of November 30?

Accepted Answer

A) $2,700 
B) $3,000 
C) $4,500 
D) $4,800 
A) $2,700 
B) $3,000 
C) $4,500 
D) $4,800

Question 5

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 6

Short-term notes receivable are reported at

Accepted Answer

A) cash (net) realizable value. 
B) face value. 
C) gross realizable value. 
D) maturity value. 
A) cash (net) realizable value. 
B) face value. 
C) gross realizable value. 
D) maturity value.

Question 7

A 30-day note dated June 18 has a maturity date of

Accepted Answer

A) July 19. 
B) July 18. 
C) July 17. 
D) July 16. 
A) July 19. 
B) July 18. 
C) July 17. 
D) July 16.

Question 8

Notes or accounts receivables that result from sales transactions are often called

Accepted Answer

A) sales receivables. 
B) non-trade receivables. 
C) trade receivables. 
D) merchandise receivables. 
A) sales receivables. 
B) non-trade receivables. 
C) trade receivables. 
D) merchandise receivables.

Question 9

Receivables are valued and reported in the balance sheet at their gross amount less any sales returns and allowances and less any cash discounts.

Accepted Answer

A) True 
 B)False

Question 10

IFRS

Accepted Answer

A) implies that receivables with different characteristics should be reported separately. 
B) requires that receivables with different characteristics should be reported separately. 
C) implies that receivables with different characteristics should be reported as one unsegregated amount. 
D) requires that receivables with different characteristics should be reported as one unsegregated amount. 
A) implies that receivables with different characteristics should be reported separately. 
B) requires that receivables with different characteristics should be reported separately. 
C) implies that receivables with different characteristics should be reported as one unsegregated amount. 
D) requires that receivables with different characteristics should be reported as one unsegregated amount.

Question 11

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 12

A reasonable amount of uncollectible accounts is evidence

Accepted Answer

A) that the credit policy is too strict. 
B) that the credit policy is too lenient. 
C) of a sound credit policy. 
D) of poor judgments on the part of the credit manager. 
A) that the credit policy is too strict. 
B) that the credit policy is too lenient. 
C) of a sound credit policy. 
D) of poor judgments on the part of the credit manager.

Question 13

A customer charges a treadmill at Annie's Sport Shop. The price is $4,000 and the financing charge is 6% per annum if the bill is not paid in 30 days. The customer fails to pay the bill within 30 days and a finance charge is added to the customer's account. What is the amount of the finance charge?

Accepted Answer

A) $8 
B) $20 
C) $80 
D) $240 
A) $8 
B) $20 
C) $80 
D) $240

Question 14

Retailers generally consider sales from the use of national credit card sales as a

Accepted Answer

A) credit sale. 
B) collection of an accounts receivable. 
C) cash sale. 
D) collection of a note receivable. 
A) credit sale. 
B) collection of an accounts receivable. 
C) cash sale. 
D) collection of a note receivable.

Question 15

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 16

Which one of the following is not a primary problem associated with accounts receivable?

Accepted Answer

A) Depreciating accounts receivable 
B) Recognizing accounts receivable 
C) Valuing accounts receivable 
D) Disposing of accounts receivable 
A) Depreciating accounts receivable 
B) Recognizing accounts receivable 
C) Valuing accounts receivable 
D) Disposing of accounts receivable

Question 17

Herman Company has a debit balance of $5,000 in its Allowance for Doubtful Accounts before any adjustments are made at the end of the year. Based on review and aging of its accounts receivable at the end of the year, Herman estimates that $70,000 of its receivables are uncollectible. The amount of bad debt expense which should be reported for the year is:

Accepted Answer

A) $5,000. 
B) $65,000. 
C) $70,000. 
D) $75,000. 
A) $5,000. 
B) $65,000. 
C) $70,000. 
D) $75,000.

Question 18

An aging of a company's accounts receivable indicates that $14,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a

Accepted Answer

A) debit to Bad Debt Expense for $14,000. 
B) debit to Allowance for Doubtful Accounts for $12,900. 
C) debit to Bad Debt Expense for $12,900. 
D) credit to Allowance for Doubtful Accounts for $14,000. 
A) debit to Bad Debt Expense for $14,000. 
B) debit to Allowance for Doubtful Accounts for $12,900. 
C) debit to Bad Debt Expense for $12,900. 
D) credit to Allowance for Doubtful Accounts for $14,000.

Question 19

The best managed companies will have

Accepted Answer

A) no uncollectible accounts. 
B) a very strict credit policy. 
C) a very lenient credit policy. 
D) some accounts that will prove to be uncollectible. 
A) no uncollectible accounts. 
B) a very strict credit policy. 
C) a very lenient credit policy. 
D) some accounts that will prove to be uncollectible.

Question 20

Using the following information:   During 2015, sales on account were $145,000 and collections on account were $100,000. Also during 2015, the company wrote off $4,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that uncollectible accounts should be estimated at $40,000. The change in the cash realizable value from the balance at 12/31/14 to 12/31/15 was a

Accepted Answer

A) $36,000 increase. 
B) $41,000 increase. 
C) $44,000 increase. 
D) $45,000 increase. 
A) $36,000 increase. 
B) $41,000 increase. 
C) $44,000 increase. 
D) $45,000 increase.

Which of the following statements concerning receivables is incorrect?

The existing balance in Allowance for Doubtful Accounts is considered in computing bad debt expense in the

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

Short-term notes receivable are reported at

A 30-day note dated June 18 has a maturity date of

Notes or accounts receivables that result from sales transactions are often called

Receivables are valued and reported in the balance sheet at their gross amount less any sales returns and allowances and less any cash discounts.

IFRS

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

A reasonable amount of uncollectible accounts is evidence

A customer charges a treadmill at Annie's Sport Shop. The price is $4,000 and the financing charge is 6% per annum if the bill is not paid in 30 days. The customer fails to pay the bill within 30 days and a finance charge is added to the customer's account. What is the amount of the finance charge?

Retailers generally consider sales from the use of national credit card sales as a

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

Which one of the following is not a primary problem associated with accounts receivable?

An aging of a company's accounts receivable indicates that $14,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a

The best managed companies will have

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

Which of the following statements concerning receivables is incorrect?

The existing balance in Allowance for Doubtful Accounts is considered in computing bad debt expense in the

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

Short-term notes receivable are reported at

A 30-day note dated June 18 has a maturity date of

Notes or accounts receivables that result from sales transactions are often called

Receivables are valued and reported in the balance sheet at their gross amount less any sales returns and allowances and less any cash discounts.

IFRS

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

A reasonable amount of uncollectible accounts is evidence

A customer charges a treadmill at Annie's Sport Shop. The price is $4,000 and the financing charge is 6% per annum if the bill is not paid in 30 days. The customer fails to pay the bill within 30 days and a finance charge is added to the customer's account. What is the amount of the finance charge?

Retailers generally consider sales from the use of national credit card sales as a

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

Which one of the following is not a primary problem associated with accounts receivable?

An aging of a company's accounts receivable indicates that $14,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a

The best managed companies will have

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