Question 1

Match the following definitions with their appropriate terms in the next eight questions.
-Account receivable

Accepted Answer

A) A receivable arising from the sale of goods or services with a verbal promise to pay. 
B) A form used to categorize the various individual accounts receivable according to the length of time each has been outstanding. 
C) A method of estimating bad debts on the basis of either the net credit sales of the period or the accounts receivable at the end of the period. 
D) A measure of the number of times receivables are collected in a period. 
E) The general ledger account that is supported by a subsidiary ledger.
F)A contra-asset account used to reduce accounts receivable to its net realizable value.
G)The detail for a number of individual items that collectively make up a single general ledger account.
H)The recognition of bad debts expense at the point an account is written off as uncollectible. 
A) A receivable arising from the sale of goods or services with a verbal promise to pay. 
B) A form used to categorize the various individual accounts receivable according to the length of time each has been outstanding. 
C) A method of estimating bad debts on the basis of either the net credit sales of the period or the accounts receivable at the end of the period. 
D) A measure of the number of times receivables are collected in a period. 
E) The general ledger account that is supported by a subsidiary ledger.
F)A contra-asset account used to reduce accounts receivable to its net realizable value.
G)The detail for a number of individual items that collectively make up a single general ledger account.
H)The recognition of bad debts expense at the point an account is written off as uncollectible.

Question 2

The most common type of receivables is accounts receivable.

Accepted Answer

A) True 
 B)False

Question 3

Whispering Pines Company reported the following on its balance sheet at December
   A How much is the net realizable value of Whispering Pines' receivables?
B What is the balance of the accounts receivable account?
C Are you able to determine whether Whispering Pines uses the allowance method or the direct write off method for uncollectibles? Why or why not?

Accepted Answer

A $318,000
B $318,000 + $12,400 = $330,4

Question 4

Comfort Shoes received a promissory note from a customer on April 1, 2014. The face amount of the note is $2,000; the terms are 12 months and 8% annual interest.
How much total interest revenue will Comfort Shoes recognize for the year ended December 31, 2014?

Accepted Answer

A)  $40 
B)  $107 
C)  $120 
D)  $160 
A)  $40 
B)  $107 
C)  $120 
D)  $160

Question 5

The comparative balance sheets for Flagler Co. for 2015 and 2014 indicate that accounts receivable decreased during 2015. Flagler uses the indirect method of preparing the operating activities section of its statement of cash flows. How will the decrease in accounts receivable be reported on the statement of cash flows?

Accepted Answer

A)  It will be included in the amount of cash and cash equivalents at the end of 2015. 
B)  It will be deducted from net income in the operating activities section. 
C)  It will be added to net income in the operating activities section. 
D)  It will be reported as a cash outflow in the investing activities section. 
A)  It will be included in the amount of cash and cash equivalents at the end of 2015. 
B)  It will be deducted from net income in the operating activities section. 
C)  It will be added to net income in the operating activities section. 
D)  It will be reported as a cash outflow in the investing activities section.

Question 6

Refer to the data for Slammer Sports.
Determine the effect on Slammer Sports' accounting equation of the year­end adjustment of bad debts using the
aging approach.

Accepted Answer

@#IMG-DLM& Beatrice Equipment
Beatrice E

Question 7

Match the following definitions with their appropriate terms in the next 14 questions.
-Maker

Accepted Answer

A) A liability resulting from the signing of a promissory note. 
B) A measure of how long it takes to collect receivables. 
C) A written promise to repay a definite sum of money on demand or at a fixed or determinable date in the future. 
D) The length of time a note is outstanding, that is, the period of time between the date it is issued and the date it matures. 
E) The party that will receive the money from a promissory note at some future date.
F)The process of selling a promissory note.
G)The date the promissory note is due.
H)The amount of cash the maker is to pay the payee on the maturity date of the note.
I)The difference between the principal amount of the note and its maturity value.
J)An asset resulting from the acceptance of a promissory note from another company.
K)Securities issued by corporations and governmental bodies as a form of borrowing.
L)Securities issued by corporations as a form of ownership in the business.
M)The party that agrees to repay the money for a promissory note at some future date.
N)The amount of cash received, or the fair value of the products or services received, by the maker when a promissory note is issued. 
A) A liability resulting from the signing of a promissory note. 
B) A measure of how long it takes to collect receivables. 
C) A written promise to repay a definite sum of money on demand or at a fixed or determinable date in the future. 
D) The length of time a note is outstanding, that is, the period of time between the date it is issued and the date it matures. 
E) The party that will receive the money from a promissory note at some future date.
F)The process of selling a promissory note.
G)The date the promissory note is due.
H)The amount of cash the maker is to pay the payee on the maturity date of the note.
I)The difference between the principal amount of the note and its maturity value.
J)An asset resulting from the acceptance of a promissory note from another company.
K)Securities issued by corporations and governmental bodies as a form of borrowing.
L)Securities issued by corporations as a form of ownership in the business.
M)The party that agrees to repay the money for a promissory note at some future date.
N)The amount of cash received, or the fair value of the products or services received, by the maker when a promissory note is issued.

Question 8

The comparative balance sheets of Midnite Corp. for 2015 and 2014 indicate that short-term trade notes receivable increased from $5,000 in 2014 to $75,000 in 2015. How will this change be reported on Midnite's statement of cash flows, if Midnite uses the indirect method?

Accepted Answer

A)  It will be included in the amount of cash and cash equivalents at the end of 2015. 
B)  It will be reported as a deduction from net income in the operating activities section. 
C)  It will be reported as a cash outflow in the investing activities section. 
D)  It will be added to net income in the operating activities section. 
A)  It will be included in the amount of cash and cash equivalents at the end of 2015. 
B)  It will be reported as a deduction from net income in the operating activities section. 
C)  It will be reported as a cash outflow in the investing activities section. 
D)  It will be added to net income in the operating activities section.

Question 9

The accounts receivable turnover ratio is a measure of how well a company manages its receivables.

Accepted Answer

A) True 
 B)False

Question 10

-Refer to information for Mellon Corporation. If Mellon uses 2% of net credit sales to estimate its bad debts, what will be the balance in the Allowance for Doubtful Accounts account after the adjustment for bad debts?

Accepted Answer

A)  $33,000 
B)  $31,800 
C)  $27,000 
D)  $25,800 
A)  $33,000 
B)  $31,800 
C)  $27,000 
D)  $25,800

Question 11

Selling on credit protects a company from the risk that some of its receivables will never be collected.

Accepted Answer

A) True 
 B)False

Question 12

-Refer to the data for Mellon Corporation. If Mellon estimates its bad debts at 2% of net credit sales, what amount will be reported as bad debt expense for 2015?

Accepted Answer

A)  $25,800 
B)  $27,000 
C)  $28,800 
D)  $30,000 
A)  $25,800 
B)  $27,000 
C)  $28,800 
D)  $30,000

Question 13

Refer to the data for Slammer Sports.
If bad debts are estimated at 1% of net sales, how much will Slammer Sports report as bad debts expense for 2014?

Accepted Answer

$7,920
$80

Question 14

-Refer to the data for Benton Corporation. What is the balance of Accounts Receivable at December 31, 2015?

Accepted Answer

A)  $209,000 
B)  $225,000 
C)  $447,000 
D)  $459,000 
A)  $209,000 
B)  $225,000 
C)  $447,000 
D)  $459,000

Question 15

Match the following definitions with their appropriate terms in the next eight questions.
-Accounts Receivable turnover

Accepted Answer

A) A receivable arising from the sale of goods or services with a verbal promise to pay. 
B) A form used to categorize the various individual accounts receivable according to the length of time each has been outstanding. 
C) A method of estimating bad debts on the basis of either the net credit sales of the period or the accounts receivable at the end of the period. 
D) A measure of the number of times receivables are collected in a period. 
E) The general ledger account that is supported by a subsidiary ledger.
F)A contra-asset account used to reduce accounts receivable to its net realizable value.
G)The detail for a number of individual items that collectively make up a single general ledger account.
H)The recognition of bad debts expense at the point an account is written off as uncollectible. 
A) A receivable arising from the sale of goods or services with a verbal promise to pay. 
B) A form used to categorize the various individual accounts receivable according to the length of time each has been outstanding. 
C) A method of estimating bad debts on the basis of either the net credit sales of the period or the accounts receivable at the end of the period. 
D) A measure of the number of times receivables are collected in a period. 
E) The general ledger account that is supported by a subsidiary ledger.
F)A contra-asset account used to reduce accounts receivable to its net realizable value.
G)The detail for a number of individual items that collectively make up a single general ledger account.
H)The recognition of bad debts expense at the point an account is written off as uncollectible.

Question 16

Verilux Company sold merchandise to Flight Corp. on November 1, 2014, for $10,000. Verilux accepted a promissory note from Flight Corp. for $10,000. The note has a term of 5 months and a stated interest rate of 7%. Verilux's accounting period ends on December 31, 2014. What amount should Verilux recognize as interest revenue on the maturity date of the note?

Accepted Answer

A)  $-0- 
B)  $175.00 
C)  $291.67 
D)  $420.00 
A)  $-0- 
B)  $175.00 
C)  $291.67 
D)  $420.00

Question 17

The payee of a note recognizes a note receivable on the balance sheet and interest revenue on its income statement.

Accepted Answer

A) True 
 B)False

Question 18

For what reason would a company buy 10% of the common stock of a second company?

Accepted Answer

A)  The company has idle cash and wishes to have a higher return than that available from temporary money market investments. 
B)  The company wishes to insure a steady source of goods from the second company. 
C)  The company wishes to prepare consolidated financial statements. 
D)  More than one of the above is correct. 
A)  The company has idle cash and wishes to have a higher return than that available from temporary money market investments. 
B)  The company wishes to insure a steady source of goods from the second company. 
C)  The company wishes to prepare consolidated financial statements. 
D)  More than one of the above is correct.

Question 19

If Cable Inc. receives $23,825 from credit card collections and has an average rate of 4.7% charged by the credit card company, its credit card sales during the period were:

Accepted Answer

A)  $111,978 
B)  $50,691 
C)  $25,000 
D)  $22,705 
A)  $111,978 
B)  $50,691 
C)  $25,000 
D)  $22,705

Question 20

A subsidiary is a separate legal entity that is owned or controlled by another entity.

Accepted Answer

A) True 
 B)False

Match the following definitions with their appropriate terms in the next eight questions. -Account receivable

The most common type of receivables is accounts receivable.

Comfort Shoes received a promissory note from a customer on April 1, 2014. The face amount of the note is $2,000; the terms are 12 months and 8% annual interest. How much total interest revenue will Comfort Shoes recognize for the year ended December 31, 2014?

Refer to the data for Slammer Sports. Determine the effect on Slammer Sports' accounting equation of the yearend adjustment of bad debts using the aging approach.

Match the following definitions with their appropriate terms in the next 14 questions. -Maker

The comparative balance sheets of Midnite Corp. for 2015 and 2014 indicate that short-term trade notes receivable increased from $5,000 in 2014 to $75,000 in 2015. How will this change be reported on Midnite's statement of cash flows, if Midnite uses the indirect method?

The accounts receivable turnover ratio is a measure of how well a company manages its receivables.

-Refer to information for Mellon Corporation. If Mellon uses 2% of net credit sales to estimate its bad debts, what will be the balance in the Allowance for Doubtful Accounts account after the adjustment for bad debts?

Selling on credit protects a company from the risk that some of its receivables will never be collected.

-Refer to the data for Mellon Corporation. If Mellon estimates its bad debts at 2% of net credit sales, what amount will be reported as bad debt expense for 2015?

Refer to the data for Slammer Sports. If bad debts are estimated at 1% of net sales, how much will Slammer Sports report as bad debts expense for 2014?

-Refer to the data for Benton Corporation. What is the balance of Accounts Receivable at December 31, 2015?

Match the following definitions with their appropriate terms in the next eight questions. -Accounts Receivable turnover

The payee of a note recognizes a note receivable on the balance sheet and interest revenue on its income statement.

For what reason would a company buy 10% of the common stock of a second company?

If Cable Inc. receives $23,825 from credit card collections and has an average rate of 4.7% charged by the credit card company, its credit card sales during the period were:

A subsidiary is a separate legal entity that is owned or controlled by another entity.

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International-Financial-Reporting-Standards

Filters

Exam 7: Receivables and Investments

Match the following definitions with their appropriate terms in the next eight questions. -Account receivable

The most common type of receivables is accounts receivable.

Comfort Shoes received a promissory note from a customer on April 1, 2014. The face amount of the note is $2,000; the terms are 12 months and 8% annual interest. How much total interest revenue will Comfort Shoes recognize for the year ended December 31, 2014?

Refer to the data for Slammer Sports. Determine the effect on Slammer Sports' accounting equation of the year­end adjustment of bad debts using the aging approach.

Match the following definitions with their appropriate terms in the next 14 questions. -Maker

The comparative balance sheets of Midnite Corp. for 2015 and 2014 indicate that short-term trade notes receivable increased from $5,000 in 2014 to $75,000 in 2015. How will this change be reported on Midnite's statement of cash flows, if Midnite uses the indirect method?

The accounts receivable turnover ratio is a measure of how well a company manages its receivables.

-Refer to information for Mellon Corporation. If Mellon uses 2% of net credit sales to estimate its bad debts, what will be the balance in the Allowance for Doubtful Accounts account after the adjustment for bad debts?

Selling on credit protects a company from the risk that some of its receivables will never be collected.

-Refer to the data for Mellon Corporation. If Mellon estimates its bad debts at 2% of net credit sales, what amount will be reported as bad debt expense for 2015?

Refer to the data for Slammer Sports. If bad debts are estimated at 1% of net sales, how much will Slammer Sports report as bad debts expense for 2014?

-Refer to the data for Benton Corporation. What is the balance of Accounts Receivable at December 31, 2015?

Match the following definitions with their appropriate terms in the next eight questions. -Accounts Receivable turnover

The payee of a note recognizes a note receivable on the balance sheet and interest revenue on its income statement.

For what reason would a company buy 10% of the common stock of a second company?

If Cable Inc. receives $23,825 from credit card collections and has an average rate of 4.7% charged by the credit card company, its credit card sales during the period were:

A subsidiary is a separate legal entity that is owned or controlled by another entity.

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International-Financial-Reporting-Standards

Filters

Refer to the data for Slammer Sports. Determine the effect on Slammer Sports' accounting equation of the yearend adjustment of bad debts using the aging approach.