Question 1

The interest on a $6,000, 6%, 60-day note receivable is

Accepted Answer

A) $60. 
B) $120. 
C) $180. 
D) $360. 
A) $60. 
B) $120. 
C) $180. 
D) $360.

Question 2

The average collection period for accounts receivable is computed by dividing 365 days by

Accepted Answer

A) net credit sales. 
B) average accounts receivable. 
C) ending accounts receivable. 
D) accounts receivable turnover. 
A) net credit sales. 
B) average accounts receivable. 
C) ending accounts receivable. 
D) accounts receivable turnover.

Question 3

Under the allowance method, Bad Debts Expense is debited when an account is deemed uncollectible and must be written off.

Accepted Answer

A) True 
 B)False

Question 4

Bad Debt Expense is reported on the income statement as

Accepted Answer

A) part of cost of goods sold. 
B) reducing gross profit. 
C) an operating expense. 
D) a contra-revenue account. 
A) part of cost of goods sold. 
B) reducing gross profit. 
C) an operating expense. 
D) a contra-revenue account.

Question 5

Which of the following are also called trade receivables?

Accepted Answer

A) Accounts receivable 
B) Other receivables 
C) Advances to employees 
D) Income taxes refundable 
A) Accounts receivable 
B) Other receivables 
C) Advances to employees 
D) Income taxes refundable

Question 6

If a retailer assesses a finance charge on the amount owed by a customer, Accounts Receivable is debited for the amount of the interest.

Accepted Answer

A) True 
 B)False

Question 7

Using the percentage-of-receivables basis, the uncollectible accounts for the year is estimated to be $38,000. If the balance for the Allowance for Doubtful Accounts is a $7,000 credit before adjustment, what is the amount of bad debt expense for the period?

Accepted Answer

A) $7,000 
B) $31,000 
C) $38,000 
D) $45,000 
A) $7,000 
B) $31,000 
C) $38,000 
D) $45,000

Question 8

A cash discount is usually granted to all of the following except

Accepted Answer

A) retail customers. 
B) retailers. 
C) wholesalers. 
D) All of these answers are correct. 
A) retail customers. 
B) retailers. 
C) wholesalers. 
D) All of these answers are correct.

Question 9

When the allowance method of recognizing bad debts expense is used, the entry to recognize that expense

Accepted Answer

A) increases net income. 
B) decreases current assets. 
C) has no effect on current assets. 
D) has no effect on net income. 
A) increases net income. 
B) decreases current assets. 
C) has no effect on current assets. 
D) has no effect on net income.

Question 10

Cash realizable value is determined by subtracting Allowance for Doubtful Accounts from Net Sales.

Accepted Answer

A) True 
 B)False

Question 11

A factor purchases receivables from businesses for a fee and collects the remittances directly from customers.

Accepted Answer

A) True 
 B)False

Question 12

A company has net credit sales of $750,000 for the year and it estimates that uncollectible accounts will be 2% of sales. If Allowance for Doubtful Accounts has a credit balance of $2,000 prior to adjustment, its balance after adjustment will be a credit of

Accepted Answer

A) $13,000. 
B) $15,000. 
C) $15,040. 
D) $17,000. 
A) $13,000. 
B) $15,000. 
C) $15,040. 
D) $17,000.

Question 13

The three primary accounting problems with accounts receivable are: (1) recognizing, (2) depreciating, and (3) disposing.

Accepted Answer

A) True 
 B)False

Question 14

In order to accelerate the receipt of cash from receivables, owners may sell the receivables to another company for cash.

Accepted Answer

A) True 
 B)False

Question 15

Under the allowance method, the cash realizable value of receivables is the same both before and after an account has been written off.

Accepted Answer

A) True 
 B)False

Question 16

On October 1, 2015, Milago Company sells (factors) $700,000 of receivables to Beanfield Factors, Inc. Beanfield assesses a service charge of 3% of the amount of receivables sold. The journal entry to record the sale by Milago will include

Accepted Answer

A) a debit of $700,000 to Accounts Receivable. 
B) a credit of $721,000 to Cash. 
C) a debit of $721,000 to Cash. 
D) a debit of $21,000 to Service Charge Expense. 
A) a debit of $700,000 to Accounts Receivable. 
B) a credit of $721,000 to Cash. 
C) a debit of $721,000 to Cash. 
D) a debit of $21,000 to Service Charge Expense.

Question 17

On November 1, Gentle Company received a $3,000, 6%, three-month note receivable. The cash to be received by Gentle Company when the note becomes due is:

Accepted Answer

A) $3,000. 
B) $3,030. 
C) $3,045. 
D) $3,180. 
A) $3,000. 
B) $3,030. 
C) $3,045. 
D) $3,180.

Question 18

The accounts receivable turnover is computed by dividing total sales by the average net receivables during the year.

Accepted Answer

A) True 
 B)False

Question 19

The interest rate specified on any note is for a

Accepted Answer

A) day. 
B) month. 
C) week. 
D) year. 
A) day. 
B) month. 
C) week. 
D) year.

Question 20

The direct write-off method

Accepted Answer

A) is acceptable for financial reporting purposes. 
B) debits Allowance for Doubtful Accounts to record write-offs of accounts. 
C) shows only actual losses from uncollectible accounts receivable. 
D) estimates bad debt losses. 
A) is acceptable for financial reporting purposes. 
B) debits Allowance for Doubtful Accounts to record write-offs of accounts. 
C) shows only actual losses from uncollectible accounts receivable. 
D) estimates bad debt losses.

The interest on a $6,000, 6%, 60-day note receivable is

The average collection period for accounts receivable is computed by dividing 365 days by

Under the allowance method, Bad Debts Expense is debited when an account is deemed uncollectible and must be written off.

Bad Debt Expense is reported on the income statement as

Which of the following are also called trade receivables?

If a retailer assesses a finance charge on the amount owed by a customer, Accounts Receivable is debited for the amount of the interest.

Using the percentage-of-receivables basis, the uncollectible accounts for the year is estimated to be $38,000. If the balance for the Allowance for Doubtful Accounts is a $7,000 credit before adjustment, what is the amount of bad debt expense for the period?

A cash discount is usually granted to all of the following except

When the allowance method of recognizing bad debts expense is used, the entry to recognize that expense

Cash realizable value is determined by subtracting Allowance for Doubtful Accounts from Net Sales.

A factor purchases receivables from businesses for a fee and collects the remittances directly from customers.

A company has net credit sales of $750,000 for the year and it estimates that uncollectible accounts will be 2% of sales. If Allowance for Doubtful Accounts has a credit balance of $2,000 prior to adjustment, its balance after adjustment will be a credit of

The three primary accounting problems with accounts receivable are: (1) recognizing, (2) depreciating, and (3) disposing.

In order to accelerate the receipt of cash from receivables, owners may sell the receivables to another company for cash.

Under the allowance method, the cash realizable value of receivables is the same both before and after an account has been written off.

On October 1, 2015, Milago Company sells (factors) $700,000 of receivables to Beanfield Factors, Inc. Beanfield assesses a service charge of 3% of the amount of receivables sold. The journal entry to record the sale by Milago will include

On November 1, Gentle Company received a $3,000, 6%, three-month note receivable. The cash to be received by Gentle Company when the note becomes due is:

The accounts receivable turnover is computed by dividing total sales by the average net receivables during the year.

The interest rate specified on any note is for a

The direct write-off method

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 interest on a $6,000, 6%, 60-day note receivable is

The average collection period for accounts receivable is computed by dividing 365 days by

Under the allowance method, Bad Debts Expense is debited when an account is deemed uncollectible and must be written off.

Bad Debt Expense is reported on the income statement as

Which of the following are also called trade receivables?

If a retailer assesses a finance charge on the amount owed by a customer, Accounts Receivable is debited for the amount of the interest.

Using the percentage-of-receivables basis, the uncollectible accounts for the year is estimated to be $38,000. If the balance for the Allowance for Doubtful Accounts is a $7,000 credit before adjustment, what is the amount of bad debt expense for the period?

A cash discount is usually granted to all of the following except

When the allowance method of recognizing bad debts expense is used, the entry to recognize that expense

Cash realizable value is determined by subtracting Allowance for Doubtful Accounts from Net Sales.

A factor purchases receivables from businesses for a fee and collects the remittances directly from customers.

A company has net credit sales of $750,000 for the year and it estimates that uncollectible accounts will be 2% of sales. If Allowance for Doubtful Accounts has a credit balance of $2,000 prior to adjustment, its balance after adjustment will be a credit of

The three primary accounting problems with accounts receivable are: (1) recognizing, (2) depreciating, and (3) disposing.

In order to accelerate the receipt of cash from receivables, owners may sell the receivables to another company for cash.

Under the allowance method, the cash realizable value of receivables is the same both before and after an account has been written off.

On October 1, 2015, Milago Company sells (factors) $700,000 of receivables to Beanfield Factors, Inc. Beanfield assesses a service charge of 3% of the amount of receivables sold. The journal entry to record the sale by Milago will include

On November 1, Gentle Company received a $3,000, 6%, three-month note receivable. The cash to be received by Gentle Company when the note becomes due is:

The accounts receivable turnover is computed by dividing total sales by the average net receivables during the year.

The interest rate specified on any note is for a

The direct write-off method

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