Question 1

The days' sales uncollected ratio measures the liquidity of receivables.

Accepted Answer

A) True 
 B)False

Question 2

If the allowance method is used, the journal entry to record the reinstatement of an account previously written off in the current period includes a debit to Accounts Receivable and a credit to Bad Debt Expense.

Accepted Answer

A) True 
 B)False

Question 3

Accounts receivable turnover measures:

Accepted Answer

A) How often a company converts its average accounts receivable balance into cash during the period. 
B) How long it takes to sell inventory on credit. 
C) Measures the relationship of cash sales to credit sales. 
D) How long it takes to sell inventory on credit and how often a company converts its average accounts receivable balance into cash during the period. 
E) How often a company converts its average accounts receivable balance into cash during the period and measures the relationship of cash sales to credit sales. 
A) How often a company converts its average accounts receivable balance into cash during the period. 
B) How long it takes to sell inventory on credit. 
C) Measures the relationship of cash sales to credit sales. 
D) How long it takes to sell inventory on credit and how often a company converts its average accounts receivable balance into cash during the period. 
E) How often a company converts its average accounts receivable balance into cash during the period and measures the relationship of cash sales to credit sales.

Question 4

The direct write-off method is used because it is simpler than the allowance method.

Accepted Answer

A) True 
 B)False

Question 5

The matching principle requires:

Accepted Answer

A) The use of the direct write-off method for bad debts. 
B) That bad debt expenses be reported in the same accounting period as the sales they helped generate. 
C) The use of the allowance method of accounting for bad debts. 
D) That bad debt expenses be reported in the same accounting period as the sales they helped generate and requires the use of the allowance method of accounting for bad debts. 
E) That bad debt expenses be reported in the same accounting period as the sales they helped generate and requires the use of the direct write-off method for bad debts. 
A) The use of the direct write-off method for bad debts. 
B) That bad debt expenses be reported in the same accounting period as the sales they helped generate. 
C) The use of the allowance method of accounting for bad debts. 
D) That bad debt expenses be reported in the same accounting period as the sales they helped generate and requires the use of the allowance method of accounting for bad debts. 
E) That bad debt expenses be reported in the same accounting period as the sales they helped generate and requires the use of the direct write-off method for bad debts.

Question 6

Pledging receivables:

Accepted Answer

A) Allow firms to raise cash and retain ownership of receivables. 
B) Transfer risk of bad debt to the lender. 
C) Allow firms to raise cash. 
D) Allow firms to retain ownership of receivables. 
E) All of these answers are correct. 
A) Allow firms to raise cash and retain ownership of receivables. 
B) Transfer risk of bad debt to the lender. 
C) Allow firms to raise cash. 
D) Allow firms to retain ownership of receivables. 
E) All of these answers are correct.

Question 7

Z-Mart had net sales of $31,500 and accounts receivable of $2,700. To one decimal, Z-Mart's days' sales uncollected was:

Accepted Answer

A) 11.7. 
B) 23.3. 
C) 31.3. 
D) 46.6. 
E) 28.6 
A) 11.7. 
B) 23.3. 
C) 31.3. 
D) 46.6. 
E) 28.6

Question 8

If a 90-day note receivable is dated June 12, what is the due date of the note?

Accepted Answer

The answer of If a 90-day note receivable is dated...

Question 9

Prepare a partial balance sheet at December 31, 2018 for the accounts receivablesection only, showing the accounts receivable at gross, the allowance for doubtful accounts and accounts receivable at net.

Accepted Answer

The answer of Prepare a partial balance sheet at December...

Question 10

Which accounting principle requires reporting expenses in the same period as the sales they helped to produce?

Accepted Answer

A) Materiality. 
B) Cost. 
C) Matching. 
D) Business entity. 
E) Going concern. 
A) Materiality. 
B) Cost. 
C) Matching. 
D) Business entity. 
E) Going concern.

Question 11

The direct write-off method does not use an allowance for doubtful accounts account.

Accepted Answer

A) True 
 B)False

Question 12

The days' sales uncollected ratio:

Accepted Answer

A) Is used to compare a company to other companies in the same industry. 
B) Is used to compare between current and prior periods. 
C) Is used to compare a company to other companies in the same industry and is used to compare between current and prior periods. 
D) Measures how much time is likely to pass before a company receives cash receipts from credit sales equal to the current amount of accounts receivable. 
E) All of these answers are correct. 
A) Is used to compare a company to other companies in the same industry. 
B) Is used to compare between current and prior periods. 
C) Is used to compare a company to other companies in the same industry and is used to compare between current and prior periods. 
D) Measures how much time is likely to pass before a company receives cash receipts from credit sales equal to the current amount of accounts receivable. 
E) All of these answers are correct.

Question 13

The direct write-off method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible.

Accepted Answer

A) True 
 B)False

Question 14

The Liccorish Pizza bought $5,000 worth of merchandise from TechCom and signed a90-day, 10% promissory note for the $5,000. TechCom's journal entry to record the transaction is:

Accepted Answer

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

Question 15

A promissory note:

Accepted Answer

A) Is a written promise to pay a specified amount of money at a certain date and is a liability to the payee. 
B) Is a written promise to pay a specified amount of money at a certain date. 
C) Is a liability to the payee. 
D) Is an account receivable. 
E) All of these answers are correct. 
A) Is a written promise to pay a specified amount of money at a certain date and is a liability to the payee. 
B) Is a written promise to pay a specified amount of money at a certain date. 
C) Is a liability to the payee. 
D) Is an account receivable. 
E) All of these answers are correct.

Question 16

The maturity date of a note is the day the note is signed.

Accepted Answer

A) True 
 B)False

Question 17

In April, Hasbro had $3,875 million in sales and $990 million in accountsreceivable?

Accepted Answer

Hasbro = 93.3 days; Mattel = 66.2 days.

Question 18

Augusto Diaz borrowed $1,000 and signed a 6-month promissory note at 11% interest.The total amount of interest is $110.00.

Accepted Answer

A) True 
 B)False

Question 19

The following information is from the financial statements of ExquisiteEnsembles:   Calculate Exquisite Ensembles' accounts receivable turnover ratio for YR 2 andYR 3. Compare the two results and give a possible explanation for any significant change.

Accepted Answer

YR 2 accou

Question 20

Identify the accounting principle involved in deciding between the allowance method and the direct write-off method. Indicate which principle is associated with each method.

Accepted Answer

The materiality principle is used to jus

The days' sales uncollected ratio measures the liquidity of receivables.

If the allowance method is used, the journal entry to record the reinstatement of an account previously written off in the current period includes a debit to Accounts Receivable and a credit to Bad Debt Expense.

Accounts receivable turnover measures:

The direct write-off method is used because it is simpler than the allowance method.

The matching principle requires:

Pledging receivables:

Z-Mart had net sales of $31,500 and accounts receivable of $2,700. To one decimal, Z-Mart's days' sales uncollected was:

If a 90-day note receivable is dated June 12, what is the due date of the note?

Prepare a partial balance sheet at December 31, 2018 for the accounts receivablesection only, showing the accounts receivable at gross, the allowance for doubtful accounts and accounts receivable at net.

Which accounting principle requires reporting expenses in the same period as the sales they helped to produce?

The direct write-off method does not use an allowance for doubtful accounts account.

The days' sales uncollected ratio:

The direct write-off method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible.

The Liccorish Pizza bought $5,000 worth of merchandise from TechCom and signed a90-day, 10% promissory note for the $5,000. TechCom's journal entry to record the transaction is:

A promissory note:

The maturity date of a note is the day the note is signed.

In April, Hasbro had $3,875 million in sales and $990 million in accountsreceivable?

Augusto Diaz borrowed $1,000 and signed a 6-month promissory note at 11% interest.The total amount of interest is $110.00.

The following information is from the financial statements of ExquisiteEnsembles: Calculate Exquisite Ensembles' accounts receivable turnover ratio for YR 2 andYR 3. Compare the two results and give a possible explanation for any significant change.

Identify the accounting principle involved in deciding between the allowance method and the direct write-off method. Indicate which principle is associated with each method.

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

The days' sales uncollected ratio measures the liquidity of receivables.

If the allowance method is used, the journal entry to record the reinstatement of an account previously written off in the current period includes a debit to Accounts Receivable and a credit to Bad Debt Expense.

Accounts receivable turnover measures:

The direct write-off method is used because it is simpler than the allowance method.

The matching principle requires:

Pledging receivables:

Z-Mart had net sales of $31,500 and accounts receivable of $2,700. To one decimal, Z-Mart's days' sales uncollected was:

If a 90-day note receivable is dated June 12, what is the due date of the note?

Prepare a partial balance sheet at December 31, 2018 for the accounts receivablesection only, showing the accounts receivable at gross, the allowance for doubtful accounts and accounts receivable at net.

Which accounting principle requires reporting expenses in the same period as the sales they helped to produce?

The direct write-off method does not use an allowance for doubtful accounts account.

The days' sales uncollected ratio:

The direct write-off method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible.

The Liccorish Pizza bought $5,000 worth of merchandise from TechCom and signed a90-day, 10% promissory note for the $5,000. TechCom's journal entry to record the transaction is:

A promissory note:

The maturity date of a note is the day the note is signed.

In April, Hasbro had $3,875 million in sales and $990 million in accountsreceivable?

Augusto Diaz borrowed $1,000 and signed a 6-month promissory note at 11% interest.The total amount of interest is $110.00.

The following information is from the financial statements of ExquisiteEnsembles: Calculate Exquisite Ensembles' accounts receivable turnover ratio for YR 2 andYR 3. Compare the two results and give a possible explanation for any significant change.

Identify the accounting principle involved in deciding between the allowance method and the direct write-off method. Indicate which principle is associated with each method.

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