Question 1

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 2

When a note receivable is dishonored

Accepted Answer

A)  interest revenue is never recorded. 
B)  bad debts expense is recorded. 
C)  the maturity value of the note is written off. 
D)  Accounts Receivable is debited if eventual collection is expected. 
A)  interest revenue is never recorded. 
B)  bad debts expense is recorded. 
C)  the maturity value of the note is written off. 
D)  Accounts Receivable is debited if eventual collection is expected.

Question 3

Prepare journal entries to record the following transactions entered into by Valente Company:
2016
June 1 Received a $10000 12% 1-year note from Andrea Foley as full payment on her account.
Nov. 1 Sold merchandise on account to Patton Inc. for $12000 terms 2/10 n/30.
Nov. 5 Patton Inc. returned merchandise worth $500.
Nov. 9 Received payment in full from Patton Inc.
Dec. 31 Accrued interest on Foley's note.
2017
June 1 Andrea Foley honored her promissory note by sending the face amount plus interest. No interest has been accrued in 2017.

Accepted Answer

The answer of Prepare journal entries to record the following...

Question 4

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 5

Which of the following is not true regarding a promissory note?

Accepted Answer

A)  Promissory notes may not be transferred to another party by endorsement. 
B)  Promissory notes may be sold to another party. 
C)  Promissory notes give a stronger legal claim to the holder than accounts receivable. 
D)  Promissory notes may be bearer notes and not specifically identify the payee by name. 
A)  Promissory notes may not be transferred to another party by endorsement. 
B)  Promissory notes may be sold to another party. 
C)  Promissory notes give a stronger legal claim to the holder than accounts receivable. 
D)  Promissory notes may be bearer notes and not specifically identify the payee by name.

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

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 8

The interest on a $8000 5% 90-day note receivable is

Accepted Answer

A)  $100. 
B)  $200. 
C)  $300. 
D)  $400. 
A)  $100. 
B)  $200. 
C)  $300. 
D)  $400.

Question 9

An aging of accounts receivable schedule is based on the premise that the longer the period an account remains unpaid the greater the probability that it will eventually be collected.

Accepted Answer

A) True 
 B)False

Question 10

A note is dishonored when it is not fully paid at maturity.

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

Using the percentage-of-receivables method for recording bad debts expense estimated uncollectible accounts are $23000. If the balance of the Allowance for Doubtful Accounts is $2000 debit before adjustment what is the amount of bad debt expense for that period?

Accepted Answer

A)  $2000 
B)  $21000 
C)  $23000 
D)  $25000 
A)  $2000 
B)  $21000 
C)  $23000 
D)  $25000

Question 13

The percentage of receivables basis for estimating uncollectible accounts emphasizes

Accepted Answer

A)  cash realizable value. 
B)  the relationship between accounts receivable and bad debts expense. 
C)  income statement relationships. 
D)  the relationship between sales and accounts receivable. 
A)  cash realizable value. 
B)  the relationship between accounts receivable and bad debts expense. 
C)  income statement relationships. 
D)  the relationship between sales and accounts receivable.

Question 14

Which uses a combination approach in recording a factoring transaction? $\begin{array} { c c } 
& \text { GAAP } & \text { IFRS } \\end{array}$
A) $\begin{array} { c c } & \text { yes } & &\text { no } \\end{array}$
B)$\begin{array} { c c }  & \text { yes } && \text { yes } \\end{array}$
C) $\begin{array} { c c } & \text { no } && \text { no } \\end{array}$
D) $\begin{array} { c c } & \text { no } && \text { yes }
\end{array}$

Accepted Answer

The answer of Which uses a combination approach in recording...

Question 15

Under the direct write-off method of accounting for uncollectible accounts Bad Debt Expense is debited

Accepted Answer

A)  when a credit sale is past due. 
B)  at the end of each accounting period. 
C)  whenever a pre-determined amount of credit sales have been made. 
D)  when an account is determined to be uncollectible. 
A)  when a credit sale is past due. 
B)  at the end of each accounting period. 
C)  whenever a pre-determined amount of credit sales have been made. 
D)  when an account is determined to be uncollectible.

Question 16

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 17

Kerr Company's account balances at December 31 for Accounts Receivable and Allowance for Doubtful Accounts were $2100000 and $20000 (Cr.) respectively. An aging of accounts receivable indicated that $170000 are expected to become uncollectible. The amount of the adjusting entry for bad debts at December 31 is

Accepted Answer

A)  $150000. 
B)  $170000. 
C)  $210000. 
D)  $190000. 
A)  $150000. 
B)  $170000. 
C)  $210000. 
D)  $190000.

Question 18

Match between columns
                        Premises: A written promise to pay a specified amount on demand or at a definite time.
Sales that involve the customer, the retailer, and the credit card issuer.
Emphasizes the matching of costs and revenues in the same period.
Amounts owed by customers from the sale of goods and services.
A note which is not paid in full at maturity.
Analysis of customer account balances by length of time they have been unpaid.
Emphasizes expected cash realizable value of accounts receivable.
Generally not acceptable for financial reporting purposes.
The amount of time that a receivable is outstanding.
Sale of accounts receivable to a factor.

Accepted Answer

The Answer of Aging of receivables and Direct write-off method is...

Question 19

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 20

Sandle Company lends Roseenn Company $9000 on April 1 accepting a four-month 4% interest note. Sandle Company prepares financial statements on April 30. What adjusting entry should be made before the financial statements can be prepared? a. 
$\begin{array}{lrr}
  \text {Note Receivable  } &9,000\
 \text { Cash } &&9,000\
\end{array}$

b. 
$\begin{array}{lrr}
  \text { Interest Receivable } &30\
 \text {  Interest Revenue } &&30\
\end{array}$

c. 
$\begin{array}{lrr}
  \text {  Cash} &30\
 \text { Interest Revenue } &&30\
\end{array}$

d. 
$\begin{array}{lrr}
  \text { Interest Receivable } &120\
 \text {  Interest Revenue } &&120\
\end{array}$

Accepted Answer

The answer of Sandle Company lends Roseenn Company $9000 on...

Exam 9: Accounting for Receivables

The face value of a note refers to the amount

When a note receivable is dishonored

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

Which of the following is not true regarding a promissory note?

The direct write-off method of accounting for bad debts

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

The interest on a $8000 5% 90-day note receivable is

An aging of accounts receivable schedule is based on the premise that the longer the period an account remains unpaid the greater the probability that it will eventually be collected.

A note is dishonored when it is not fully paid at maturity.

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

Using the percentage-of-receivables method for recording bad debts expense estimated uncollectible accounts are $23000. If the balance of the Allowance for Doubtful Accounts is $2000 debit before adjustment what is the amount of bad debt expense for that period?

The percentage of receivables basis for estimating uncollectible accounts emphasizes

Which uses a combination approach in recording a factoring transaction? GAAP IFRS A) yes no B) yes yes C) no no D) no yes

Under the direct write-off method of accounting for uncollectible accounts Bad Debt Expense is debited

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

A promissory note

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Incremental Analysis and Capital Budgeting

Time Value of Money

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