Question 1

Quality of receivables refers to:

Accepted Answer

A) The creditworthiness of the customers. 
B) Sales turnover. 
C) The likelihood of collection. 
D) The speed of collection. 
E) The speed and likelihood of collection. 
A) The creditworthiness of the customers. 
B) Sales turnover. 
C) The likelihood of collection. 
D) The speed of collection. 
E) The speed and likelihood of collection.

Question 2

The aging of accounts receivable examines each account receivable to estimate the amount that is uncollectible.

Accepted Answer

A) True 
 B)False

Question 3

Installment accounts receivable is another name for aging accounts receivable.

Accepted Answer

A) True 
 B)False

Question 4

An accounting procedure that (1)estimates and reports bad debt expense from creditsales during the period of the sales and (2)reports accounts receivable at the amount of cash inflow that is expected from their collection is the:

Accepted Answer

A) Allowance method of accounting for bad debts. 
B) Direct write-off method of accounting for bad debts. 
C) Aging of accounts receivable. 
D) Adjustment method for uncollectible debts. 
E) Cash basis method of accounting for bad debts. 
A) Allowance method of accounting for bad debts. 
B) Direct write-off method of accounting for bad debts. 
C) Aging of accounts receivable. 
D) Adjustment method for uncollectible debts. 
E) Cash basis method of accounting for bad debts.

Question 5

The direct write-off method satisfies generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 6

A promissory note from a customer:

Accepted Answer

A) Is a short-term investment. 
B) Is a cash equivalent. 
C) Is a note receivable. 
D) Is a note payable. 
E) Is an account receivable. 
A) Is a short-term investment. 
B) Is a cash equivalent. 
C) Is a note receivable. 
D) Is a note payable. 
E) Is an account receivable.

Question 7

TechCom factored $35,000 of its accounts receivable and was charged a 2% factoringfee. The journal entry to record this would include a debit to Cash of $35,000; a debit toFactoring Fee Expense of $700; and a credit to Accounts Receivable of $35,700.

Accepted Answer

A) True 
 B)False

Question 8

Failure by the maker of a promissory note to pay the amount due at maturity is known as:

Accepted Answer

A) Protesting a note. 
B) Depreciating a note. 
C) Discounting a note. 
D) Dishonouring a note. 
E) Closing a note. 
A) Protesting a note. 
B) Depreciating a note. 
C) Discounting a note. 
D) Dishonouring a note. 
E) Closing a note.

Question 9

MixRecording Studios purchased $7,800 in electronic components from TechCom.MixRecording Studios signed a 60-day, 10% promissory note for $7,800. TechCom's journal entry to record the transaction should be:

Accepted Answer

A)   
B)   
C)   
D)   
E)   
A)   
B)   
C)   
D)   
E)

Question 10

Notes receivable are classified as current liabilities.

Accepted Answer

A) True 
 B)False

Question 11

Wasson Corp had the following items in its unadjusted trial balance at December31:   Prepare the adjusting entry to estimate bad debts under each of the following independent situations(1)Bad debts are estimated to be 8% of credit sales.(2)An analysis shows that 8% of outstanding accounts receivable will not be collected.

Accepted Answer

@#IMG-DLM& On December 31, Burr Company'

Question 12

The materiality principle:

Accepted Answer

A) Permits use of the direct write-off method. 
B) States that an amount can be ignored if its effect on financial statements is unimportant to the user. 
C) Prohibits use of the direct write-off method. 
D) States that an amount can be ignored if its effect on financial statements is unimportant to the user and permits use of the direct write-off method. 
E) Both permits and prohibits use of the direct write-off method. 
A) Permits use of the direct write-off method. 
B) States that an amount can be ignored if its effect on financial statements is unimportant to the user. 
C) Prohibits use of the direct write-off method. 
D) States that an amount can be ignored if its effect on financial statements is unimportant to the user and permits use of the direct write-off method. 
E) Both permits and prohibits use of the direct write-off method.

Question 13

The recording of accounts receivable is linked to the:

Accepted Answer

A) Cost principle. 
B) Matching principle. 
C) Materiality principle. 
D) Monetary unit principle. 
E) Revenue recognition principle. 
A) Cost principle. 
B) Matching principle. 
C) Materiality principle. 
D) Monetary unit principle. 
E) Revenue recognition principle.

Question 14

Companies must follow both the matching principle and the materiality principle when considering the use of the direct write-off method.

Accepted Answer

A) True 
 B)False

Question 15

The cash to be received at maturity on a $10,000, 8%, 90-day note receivable is:

Accepted Answer

A) $6,187.26. 
B) $5,126.26. 
C) $12,297.26. 
D) $10,197.26. 
E) $197.26. 
A) $6,187.26. 
B) $5,126.26. 
C) $12,297.26. 
D) $10,197.26. 
E) $197.26.

Question 16

The days' sales uncollected ratio is calculated by:

Accepted Answer

A) Dividing accounts receivable by net sales and multiplying the result by 365. 
B) Multiplying net sales by accounts receivable and dividing the result by 365. 
C) Dividing net sales by accounts receivable. 
D) Dividing accounts receivable by net sales. 
E) Dividing net sales by accounts receivable and multiplying the result by 365. 
A) Dividing accounts receivable by net sales and multiplying the result by 365. 
B) Multiplying net sales by accounts receivable and dividing the result by 365. 
C) Dividing net sales by accounts receivable. 
D) Dividing accounts receivable by net sales. 
E) Dividing net sales by accounts receivable and multiplying the result by 365.

Question 17

The use of the bad debt and allowance accounts is required under which accounting concept?

Accepted Answer

A) Cost principle. 
B) The matching principle. 
C) The monetary unit principle. 
D) The materiality principle. 
E) The revenue recognition principle. 
A) Cost principle. 
B) The matching principle. 
C) The monetary unit principle. 
D) The materiality principle. 
E) The revenue recognition principle.

Question 18

A credit sale of $2,500 to a customer would result in:

Accepted Answer

A) A debit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the Accounts Receivable Ledger. 
B) A credit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the Accounts Receivable Ledger. 
C) A credit to Sales and a credit to the customer's account in the Accounts Receivable Ledger. 
D) A credit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the Accounts Receivable Ledger. 
E) A debit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the Accounts Receivable Ledger. 
A) A debit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the Accounts Receivable Ledger. 
B) A credit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the Accounts Receivable Ledger. 
C) A credit to Sales and a credit to the customer's account in the Accounts Receivable Ledger. 
D) A credit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the Accounts Receivable Ledger. 
E) A debit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the Accounts Receivable Ledger.

Question 19

Credit sales are recorded by crediting an account receivable for a specific customer.

Accepted Answer

A) True 
 B)False

Question 20

Explain why the allowance method satisfies the matching principle.

Accepted Answer

The allowance method recognizes the bad

Quality of receivables refers to:

The aging of accounts receivable examines each account receivable to estimate the amount that is uncollectible.

Installment accounts receivable is another name for aging accounts receivable.

An accounting procedure that (1)estimates and reports bad debt expense from creditsales during the period of the sales and (2)reports accounts receivable at the amount of cash inflow that is expected from their collection is the:

The direct write-off method satisfies generally accepted accounting principles.

A promissory note from a customer:

TechCom factored $35,000 of its accounts receivable and was charged a 2% factoringfee. The journal entry to record this would include a debit to Cash of $35,000; a debit toFactoring Fee Expense of $700; and a credit to Accounts Receivable of $35,700.

Failure by the maker of a promissory note to pay the amount due at maturity is known as:

MixRecording Studios purchased $7,800 in electronic components from TechCom.MixRecording Studios signed a 60-day, 10% promissory note for $7,800. TechCom's journal entry to record the transaction should be:

Notes receivable are classified as current liabilities.

The materiality principle:

The recording of accounts receivable is linked to the:

Companies must follow both the matching principle and the materiality principle when considering the use of the direct write-off method.

The cash to be received at maturity on a $10,000, 8%, 90-day note receivable is:

The days' sales uncollected ratio is calculated by:

The use of the bad debt and allowance accounts is required under which accounting concept?

A credit sale of $2,500 to a customer would result in:

Credit sales are recorded by crediting an account receivable for a specific customer.

Explain why the allowance method satisfies the matching principle.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Inventory Costing and Valuation

Internal Control and Cash

Appendix

Filters

Exam 8: Receivables

Quality of receivables refers to:

The aging of accounts receivable examines each account receivable to estimate the amount that is uncollectible.

Installment accounts receivable is another name for aging accounts receivable.

An accounting procedure that (1)estimates and reports bad debt expense from creditsales during the period of the sales and (2)reports accounts receivable at the amount of cash inflow that is expected from their collection is the:

The direct write-off method satisfies generally accepted accounting principles.

A promissory note from a customer:

TechCom factored $35,000 of its accounts receivable and was charged a 2% factoringfee. The journal entry to record this would include a debit to Cash of $35,000; a debit toFactoring Fee Expense of $700; and a credit to Accounts Receivable of $35,700.

Failure by the maker of a promissory note to pay the amount due at maturity is known as:

MixRecording Studios purchased $7,800 in electronic components from TechCom.MixRecording Studios signed a 60-day, 10% promissory note for $7,800. TechCom's journal entry to record the transaction should be:

Notes receivable are classified as current liabilities.

The materiality principle:

The recording of accounts receivable is linked to the:

Companies must follow both the matching principle and the materiality principle when considering the use of the direct write-off method.

The cash to be received at maturity on a $10,000, 8%, 90-day note receivable is:

The days' sales uncollected ratio is calculated by:

The use of the bad debt and allowance accounts is required under which accounting concept?

A credit sale of $2,500 to a customer would result in:

Credit sales are recorded by crediting an account receivable for a specific customer.

Explain why the allowance method satisfies the matching principle.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Inventory Costing and Valuation

Internal Control and Cash

Appendix

Filters