Question 1

When the allowance method is used to account for uncollectible accounts, Bad Debt Expense is debited when

Accepted Answer

A) a sale is made. 
B) an account becomes bad and is written off. 
C) management estimates the amount of uncollectibles. 
D) a customer's account becomes past-due. 
A) a sale is made. 
B) an account becomes bad and is written off. 
C) management estimates the amount of uncollectibles. 
D) a customer's account becomes past-due.

Question 2

Kill Corporation's unadjusted trial balance includes the following balances (assume normal balances):   Bad debts are estimated to be 6% of outstanding receivables. What amount of bad debt expense will the company record?

Accepted Answer

A) $15,000 
B) $36,000 
C) $50,100 
D) $51,000 
A) $15,000 
B) $36,000 
C) $50,100 
D) $51,000

Question 3

Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible.

Accepted Answer

A) True 
 B)False

Question 4

Schwartzman Co., makes a credit card sale to a customer for $800. The credit card sale has a grace period of 30 days and then an interest charge of 1.5% per month is added to the balance. If the unpaid balance on the above sale is $640 at the end of the grace period, the interest charge is

Accepted Answer

A) $6.40. 
B) $9.60. 
C) $11.00. 
D) $16.00. 
A) $6.40. 
B) $9.60. 
C) $11.00. 
D) $16.00.

Question 5

Deborah Company's account balances at December 31 for Accounts Receivable and Allowance for Doubtful Accounts were $2,100,000 and $50,000 (Cr.), respectively. An aging of accounts receivable indicated that $180,000 are expected to become uncollectible. The amount of the adjusting entry for bad debts at December 31 is

Accepted Answer

A) $130,000. 
B) $180,000. 
C) $210,000. 
D) $230,000. 
A) $130,000. 
B) $180,000. 
C) $210,000. 
D) $230,000.

Question 6

Bad Debt Expense is considered

Accepted Answer

A) an avoidable cost in doing business on a credit basis. 
B) an internal control weakness. 
C) a necessary risk of doing business on a credit basis. 
D) avoidable unless there is a recession. 
A) an avoidable cost in doing business on a credit basis. 
B) an internal control weakness. 
C) a necessary risk of doing business on a credit basis. 
D) avoidable unless there is a recession.

Question 7

In 2015, Warehouse 13 had net credit sales of $750,000. On January 1, 2015, Allowance for Doubtful Accounts had a credit balance of $16,000. During 2015, $29,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage of receivable basis). If the accounts receivable balance at December 31 was $150,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2015?

Accepted Answer

A) $150,000 
B) $29,000 
C) $28,000 
D) $31,000 
A) $150,000 
B) $29,000 
C) $28,000 
D) $31,000

Question 8

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 9

The financial statements of Gervais Manufacturing Company report net sales of $500,000 and accounts receivable of $80,000 and $40,000 at the beginning and end of the year, respectively. What is the average collection period for accounts receivable in days?

Accepted Answer

A) 29.2 days 
B) 36.5 days 
C) 43.8 days 
D) 57.9 days 
A) 29.2 days 
B) 36.5 days 
C) 43.8 days 
D) 57.9 days

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

The balance of Allowance for Doubtful Accounts prior to making the adjusting entry to record estimated uncollectible accounts

Accepted Answer

A) is relevant when using the percentage of receivables basis. 
B) is relevant when using the percentage of sales basis. 
C) is relevant to both bases of adjusting for uncollectible accounts. 
D) will never show a debit balance at this stage in the accounting cycle. 
A) is relevant when using the percentage of receivables basis. 
B) is relevant when using the percentage of sales basis. 
C) is relevant to both bases of adjusting for uncollectible accounts. 
D) will never show a debit balance at this stage in the accounting cycle.

Question 12

The receivable that is usually evidenced by a formal instrument of credit is a(n)

Accepted Answer

A) trade receivable. 
B) note receivable. 
C) accounts receivable. 
D) income tax receivable. 
A) trade receivable. 
B) note receivable. 
C) accounts receivable. 
D) income tax receivable.

Question 13

The maturity date of a 1-month note receivable dated June 30 is July 30.

Accepted Answer

A) True 
 B)False

Question 14

When a note receivable is honored, Cash is debited for the note's

Accepted Answer

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

Question 15

An analysis and aging of the accounts receivable of Hugh Company at December 31 revealed the following data:   The cash realizable value of the accounts receivable at December 31, after adjustment, is:

Accepted Answer

A) $794,000. 
B) $844,000. 
C) $850,000. 
D) $894,000. 
A) $794,000. 
B) $844,000. 
C) $850,000. 
D) $894,000.

Question 16

A debit balance in the Allowance for Doubtful Accounts

Accepted Answer

A) is the normal balance for that account. 
B) indicates that actual bad debt write-offs have exceeded previous provisions for bad debts. 
C) indicates that actual bad debt write-offs have been less than what was estimated. 
D) cannot occur if the percentage of sales method of estimating bad debts is used. 
A) is the normal balance for that account. 
B) indicates that actual bad debt write-offs have exceeded previous provisions for bad debts. 
C) indicates that actual bad debt write-offs have been less than what was estimated. 
D) cannot occur if the percentage of sales method of estimating bad debts is used.

Question 17

Which of the following receivables would not be classified as an "other receivable"?

Accepted Answer

A) Advance to an employee 
B) Refundable income tax 
C) Notes receivable 
D) Interest receivable 
A) Advance to an employee 
B) Refundable income tax 
C) Notes receivable 
D) Interest receivable

Question 18

Which receivables accounting and reporting issue is not essentially the same for IFRS and GAAP?

Accepted Answer

A) The use of allowance accounts and the allowance method. 
B) How to record discounts. 
C) How to record factoring. 
D) All of these are essentially the same for IFRS and GAAP. 
A) The use of allowance accounts and the allowance method. 
B) How to record discounts. 
C) How to record factoring. 
D) All of these are essentially the same for IFRS and GAAP.

Question 19

Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $32,000. If the balance of the Allowance for Doubtful Accounts is $8,000 debit before adjustment, what is the amount of bad debt expense for that period?

Accepted Answer

A) $8,000 
B) $24,000 
C) $32,000 
D) $40,000 
A) $8,000 
B) $24,000 
C) $32,000 
D) $40,000

Question 20

If a company fails to record estimated bad debts expense,

Accepted Answer

A) cash realizable value is understated. 
B) expenses are understated. 
C) revenues are understated. 
D) receivables are understated. 
A) cash realizable value is understated. 
B) expenses are understated. 
C) revenues are understated. 
D) receivables are understated.

When the allowance method is used to account for uncollectible accounts, Bad Debt Expense is debited when

Kill Corporation's unadjusted trial balance includes the following balances (assume normal balances): Bad debts are estimated to be 6% of outstanding receivables. What amount of bad debt expense will the company record?

Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible.

Schwartzman Co., makes a credit card sale to a customer for $800. The credit card sale has a grace period of 30 days and then an interest charge of 1.5% per month is added to the balance. If the unpaid balance on the above sale is $640 at the end of the grace period, the interest charge is

Bad Debt Expense is considered

A promissory note

The financial statements of Gervais Manufacturing Company report net sales of $500,000 and accounts receivable of $80,000 and $40,000 at the beginning and end of the year, respectively. What is the average collection period for accounts receivable in days?

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

The balance of Allowance for Doubtful Accounts prior to making the adjusting entry to record estimated uncollectible accounts

The receivable that is usually evidenced by a formal instrument of credit is a(n)

The maturity date of a 1-month note receivable dated June 30 is July 30.

When a note receivable is honored, Cash is debited for the note's

An analysis and aging of the accounts receivable of Hugh Company at December 31 revealed the following data: The cash realizable value of the accounts receivable at December 31, after adjustment, is:

A debit balance in the Allowance for Doubtful Accounts

Which of the following receivables would not be classified as an "other receivable"?

Which receivables accounting and reporting issue is not essentially the same for IFRS and GAAP?

Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $32,000. If the balance of the Allowance for Doubtful Accounts is $8,000 debit before adjustment, what is the amount of bad debt expense for that period?

If a company fails to record estimated bad debts expense,

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

When the allowance method is used to account for uncollectible accounts, Bad Debt Expense is debited when

Kill Corporation's unadjusted trial balance includes the following balances (assume normal balances): Bad debts are estimated to be 6% of outstanding receivables. What amount of bad debt expense will the company record?

Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible.

Schwartzman Co., makes a credit card sale to a customer for $800. The credit card sale has a grace period of 30 days and then an interest charge of 1.5% per month is added to the balance. If the unpaid balance on the above sale is $640 at the end of the grace period, the interest charge is

Bad Debt Expense is considered

A promissory note

The financial statements of Gervais Manufacturing Company report net sales of $500,000 and accounts receivable of $80,000 and $40,000 at the beginning and end of the year, respectively. What is the average collection period for accounts receivable in days?

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

The balance of Allowance for Doubtful Accounts prior to making the adjusting entry to record estimated uncollectible accounts

The receivable that is usually evidenced by a formal instrument of credit is a(n)

The maturity date of a 1-month note receivable dated June 30 is July 30.

When a note receivable is honored, Cash is debited for the note's

An analysis and aging of the accounts receivable of Hugh Company at December 31 revealed the following data: The cash realizable value of the accounts receivable at December 31, after adjustment, is:

A debit balance in the Allowance for Doubtful Accounts

Which of the following receivables would not be classified as an "other receivable"?

Which receivables accounting and reporting issue is not essentially the same for IFRS and GAAP?

Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $32,000. If the balance of the Allowance for Doubtful Accounts is $8,000 debit before adjustment, what is the amount of bad debt expense for that period?

If a company fails to record estimated bad debts expense,

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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