Question 1

If a department store fails to make the entry to accrue the finance charges due from customers,

Accepted Answer

A)  accounts receivable will be overstated. 
B)  interest revenue will be understated. 
C)  interest expense will be overstated. 
D)  interest expense will be understated. 
A)  accounts receivable will be overstated. 
B)  interest revenue will be understated. 
C)  interest expense will be overstated. 
D)  interest expense will be understated.

Question 2

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles

Accepted Answer

A)  will increase income in the period it is collected. 
B)  will decrease income in the period it is collected. 
C)  requires a correcting entry for the period in which the account was written off. 
D)  does not affect income in the period it is collected. 
A)  will increase income in the period it is collected. 
B)  will decrease income in the period it is collected. 
C)  requires a correcting entry for the period in which the account was written off. 
D)  does not affect income in the period it is collected.

Question 3

Black Company provides for bad debts expense at the rate of 2% of credit sales. The following data are available for 2010:   The Allowance for Doubtful Accounts balance at December 31, 2010, should be:

Accepted Answer

A)  $34,000 
B)  $30,000 
C)  $25,000 
D)  $6,500 
A)  $34,000 
B)  $30,000 
C)  $25,000 
D)  $6,500

Question 4

Maloney Company had net credit sales during the year of $1,200,000 and cost of goods sold of $750,000. The balance in accounts receivable at the beginning of the year was $120,000, and the end of the year it was $180,000. What was the accounts receivable turnover ratio?

Accepted Answer

A)  5.0 
B)  6.7 
C)  8.0 
D)  10.0 
A)  5.0 
B)  6.7 
C)  8.0 
D)  10.0

Question 5

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 6

The financial statements of Gentry Manufacturing Company report net sales of $400,000 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)  40 times 
B)  80 times 
C)  54.7 times 
D)  50 times 
A)  40 times 
B)  80 times 
C)  54.7 times 
D)  50 times

Question 7

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 8

An aging of a company's accounts receivable indicates that $9,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a

Accepted Answer

A)  debit to Bad Debts Expense for $9,000. 
B)  debit to Allowance for Doubtful Accounts for $7,900. 
C)  debit to Bad Debts Expense for $7,900. 
D)  credit to Allowance for Doubtful Accounts for $9,000. 
A)  debit to Bad Debts Expense for $9,000. 
B)  debit to Allowance for Doubtful Accounts for $7,900. 
C)  debit to Bad Debts Expense for $7,900. 
D)  credit to Allowance for Doubtful Accounts for $9,000.

Question 9

Which of the following would require a compound journal entry?

Accepted Answer

A)  To record merchandise returned that was previously purchased on account. 
B)  To record sales on account. 
C)  To record purchases of inventory when a discount is offered for prompt payment. 
D)  To record collection of accounts receivable when a cash discount is taken. 
A)  To record merchandise returned that was previously purchased on account. 
B)  To record sales on account. 
C)  To record purchases of inventory when a discount is offered for prompt payment. 
D)  To record collection of accounts receivable when a cash discount is taken.

Question 10

Collection of a note receivable will result in a credit to ______________ for the face value of the note and a credit to ______________.

Accepted Answer

Notes Rece

Question 11

A company that receives an interest bearing note receivable will

Accepted Answer

A)  debit Notes Receivable for the maturity value of the note. 
B)  credit Notes Receivable for the maturity value of the note. 
C)  debit Notes Receivable for the face value of the note. 
D)  credit Notes Receivable for the face value of the note. 
A)  debit Notes Receivable for the maturity value of the note. 
B)  credit Notes Receivable for the maturity value of the note. 
C)  debit Notes Receivable for the face value of the note. 
D)  credit Notes Receivable for the face value of the note.

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

Hahn Company uses the percentage of sales method for recording bad debts expense. For the year, cash sales are $500,000 and credit sales are $2,000,000. Management estimates that 1% is the sales percentage to use. What adjusting entry will Hahn Company make to record the bad debts expense?

Accepted Answer

The answer of Hahn Company uses the percentage of sales...

Question 14

When calculating interest on a promissory note with the maturity date stated in terms of days, the

Accepted Answer

A)  maker pays more interest if 365 days are used instead of 360. 
B)  maker pays the same interest regardless if 365 or 360 days are used. 
C)  payee receives more interest if 360 days are used instead of 365. 
D)  payee receives less interest if 360 days are used instead of 365. 
A)  maker pays more interest if 365 days are used instead of 360. 
B)  maker pays the same interest regardless if 365 or 360 days are used. 
C)  payee receives more interest if 360 days are used instead of 365. 
D)  payee receives less interest if 360 days are used instead of 365.

Question 15

Which of the following would be considered as an unlikely occurrence?

Accepted Answer

A)  Manufacturer offers a cash discount to a wholesaler. 
B)  Wholesaler offers a cash discount to a retailer. 
C)  Retailer offers a cash discount to a customer. 
D)  All of these are standard practices. 
A)  Manufacturer offers a cash discount to a wholesaler. 
B)  Wholesaler offers a cash discount to a retailer. 
C)  Retailer offers a cash discount to a customer. 
D)  All of these are standard practices.

Question 16

Notes or accounts receivables that result from sales transactions are often called

Accepted Answer

A)  sales receivables. 
B)  non-trade receivables. 
C)  trade receivables. 
D)  merchandise receivables. 
A)  sales receivables. 
B)  non-trade receivables. 
C)  trade receivables. 
D)  merchandise receivables.

Question 17

A note receivable is a negotiable instrument which

Accepted Answer

A)  eliminates the need for a bad debts allowance. 
B)  can be transferred to another party by endorsement. 
C)  takes the place of checks in a business firm. 
D)  can only be collected by a bank. 
A)  eliminates the need for a bad debts allowance. 
B)  can be transferred to another party by endorsement. 
C)  takes the place of checks in a business firm. 
D)  can only be collected by a bank.

Question 18

Listed below are two independent situations involving the disposition of receivables.
1. Fultz Company sells $300,000 of its receivables to Quick Factors, Inc. Quick Factors assesses a finance charge of 2% of the amount of receivables sold.
Instructions
Prepare the journal entry to record the sale of the receivables on Fultz Company's books.
2. A restaurant is the site for a large company party. The bill totals $3,000 and is charged by the patron on a Visa credit card.
Instructions
Assume a 3% service fee is charged by Visa. Record the entry for the transaction on the restaurant's books.

Accepted Answer

The answer of Listed below are two independent situations involving...

Question 19

Both accounts receivable and notes receivable represent claims that are expected to be collected in cash.

Accepted Answer

A) True 
 B)False

Question 20

The accounts receivable turnover ratio is computed by dividing

Accepted Answer

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

Exam 9: Accounting for Receivables

If a department store fails to make the entry to accrue the finance charges due from customers,

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles

Black Company provides for bad debts expense at the rate of 2% of credit sales. The following data are available for 2010: The Allowance for Doubtful Accounts balance at December 31, 2010, should be:

Maloney Company had net credit sales during the year of $1,200,000 and cost of goods sold of $750,000. The balance in accounts receivable at the beginning of the year was $120,000, and the end of the year it was $180,000. What was the accounts receivable turnover ratio?

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

The financial statements of Gentry Manufacturing Company report net sales of $400,000 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?

A promissory note

An aging of a company's accounts receivable indicates that $9,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a

Which of the following would require a compound journal entry?

Collection of a note receivable will result in a credit to ______________ for the face value of the note and a credit to ______________.

A company that receives an interest bearing note receivable will

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

Hahn Company uses the percentage of sales method for recording bad debts expense. For the year, cash sales are $500,000 and credit sales are $2,000,000. Management estimates that 1% is the sales percentage to use. What adjusting entry will Hahn Company make to record the bad debts expense?

When calculating interest on a promissory note with the maturity date stated in terms of days, the

Which of the following would be considered as an unlikely occurrence?

Notes or accounts receivables that result from sales transactions are often called

A note receivable is a negotiable instrument which

Both accounts receivable and notes receivable represent claims that are expected to be collected in cash.

The accounts receivable turnover ratio is computed by dividing

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 Analysis: the Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Filters

Collection of a note receivable will result in a credit to for the face value of the note and a credit to .