Question 1

Which one of the following is an accurate description of Allowance for Doubtful Accounts?

Accepted Answer

A)  Contra account 
B)  Liability account 
C)  Revenue account 
D)  Expense account 
A)  Contra account 
B)  Liability account 
C)  Revenue account 
D)  Expense account

Question 2

Changes in accounts and notes receivable are reported in the __________ Activities section of a statement of cash flows prepared using the indirect method.

Accepted Answer

The answer of Changes in accounts and notes receivable are...

Question 3

Match the following definitions with their appropriate terms .
-Control account

Accepted Answer

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

Question 4

If Rope 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 5

What should a company do to improve its accounts receivable turnover rate?

Accepted Answer

A)  Lower its selling prices. 
B)  Increase its sales force. 
C)  Give customers credit terms of 2/10, n/30 rather than 1/10, n/30. 
D)  Reduce the number of employees working in the credit department. 
A)  Lower its selling prices. 
B)  Increase its sales force. 
C)  Give customers credit terms of 2/10, n/30 rather than 1/10, n/30. 
D)  Reduce the number of employees working in the credit department.

Question 6

Comfort Shoes received a promissory note from a customer on April 1, 2016.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, 2016?

Accepted Answer

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

Question 7

A company is referred to as a parent if it owns

Accepted Answer

A)  33% of the debt securities of a second company 
B)  100% of the debt securities of a second company 
C)  15% of the equity securities of a second company 
D)  None of these choices 
A)  33% of the debt securities of a second company 
B)  100% of the debt securities of a second company 
C)  15% of the equity securities of a second company 
D)  None of these choices

Question 8

Assuming a company uses the allowance method, the entry to recognize the write-off of the specific uncollectible accounts will act to:

Accepted Answer

A)  Increase total assets and total equity 
B)  Increase total assets and decrease total equity 
C)  Decrease total assets and total equity 
D)  Not affect total assets or total equity 
A)  Increase total assets and total equity 
B)  Increase total assets and decrease total equity 
C)  Decrease total assets and total equity 
D)  Not affect total assets or total equity

Question 9

Match the following definitions with their appropriate terms .
-Note receivable

Accepted Answer

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

Question 10

The amount of money received, or the fair value of the products or services received by the maker when a promissory note is issued is called the ____________________.

Accepted Answer

The answer of The amount of money received, or the...

Question 11

Which of the following statements is true regarding the two allowance methods used to account for bad debts?

Accepted Answer

A)  The percentage of net credit sales approach takes into account the existing balance in the Allowance for Doubtful Accounts account. 
B)  The direct write-off method takes into account the existing balance in the Allowance for Doubtful Accounts account. 
C)  The percentage of accounts receivable approach takes into account the existing balance in the Allowance for Doubtful Accounts account. 
D)  The direct write-off method does a better job of matching revenues and expenses. 
A)  The percentage of net credit sales approach takes into account the existing balance in the Allowance for Doubtful Accounts account. 
B)  The direct write-off method takes into account the existing balance in the Allowance for Doubtful Accounts account. 
C)  The percentage of accounts receivable approach takes into account the existing balance in the Allowance for Doubtful Accounts account. 
D)  The direct write-off method does a better job of matching revenues and expenses.

Question 12

The accounts receivable turnover ratio is used to evaluate how well a company does in collecting its accounts receivable.

Accepted Answer

A) True 
 B)False

Question 13

The maker of a note recognizes a note payable on the balance sheet and interest expense on its income statement.

Accepted Answer

A) True 
 B)False

Question 14

Which one of the following statements is true if a company's collection period for accounts receivable is unacceptably long?

Accepted Answer

A)  The company may need to borrow to acquire operating cash. 
B)  The company may offer trade discounts to lengthen the collection period. 
C)  Cash flows from operations may be higher than expected for the company's sales. 
D)  The company should expand operations with its excess cash. 
A)  The company may need to borrow to acquire operating cash. 
B)  The company may offer trade discounts to lengthen the collection period. 
C)  Cash flows from operations may be higher than expected for the company's sales. 
D)  The company should expand operations with its excess cash.

Question 15

The _______________ the accounts receivable turnover ratio, the quicker the each dollar of accounts receivable can be collected.

Accepted Answer

The answer of The _______________ the accounts receivable turnover ratio,...

Question 16

Match the following definitions with their appropriate terms .
-Direct write-off method

Accepted Answer

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

Question 17

Match the following definitions with their appropriate terms .
-Debt securities

Accepted Answer

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

Question 18

Genuine Parts received a promissory note from a customer on March 1, 2016.The face amount of the note is $8,000; the terms are 90 days and 9% interest.At the maturity date, the customer pays the amount due for the note and interest.What entry is required on the books of Genuine Parts on the maturity date assuming none of the interest had already been recognized?

Accepted Answer

A)  Increase Cash, $8,000, and decrease Notes Receivable $8,000 
B)  Increase Cash, $8,180, increase Interest Revenue, $180, and decrease Notes Receivable, $8,000 
C)  Increase Cash $8,720, decrease Notes Receivable $8,000, and increase Interest Revenue, $720 
D)  No entry is required; the customer pays the amount due to the bank 
A)  Increase Cash, $8,000, and decrease Notes Receivable $8,000 
B)  Increase Cash, $8,180, increase Interest Revenue, $180, and decrease Notes Receivable, $8,000 
C)  Increase Cash $8,720, decrease Notes Receivable $8,000, and increase Interest Revenue, $720 
D)  No entry is required; the customer pays the amount due to the bank

Question 19

On July 1, 2016, Falcon Company received a $20,000 promissory note for services from Jordyn Company.The annual interest rate is 5%.Principal and interest are paid in cash at the maturity date of June 30, 2017. ​
The effect on Falcon's financial statements on July 1, 2016 is as follows

Accepted Answer

A)  Assets increase; owners' equity increases 
B)  Assets decrease and owners' equity decreases 
C)  Assets decrease 
D)  No net change in assets 
A)  Assets increase; owners' equity increases 
B)  Assets decrease and owners' equity decreases 
C)  Assets decrease 
D)  No net change in assets

Question 20

Match the following definitions with their appropriate terms .
-Promissory note

Accepted Answer

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

Which one of the following is an accurate description of Allowance for Doubtful Accounts?

Changes in accounts and notes receivable are reported in the __________ Activities section of a statement of cash flows prepared using the indirect method.

Match the following definitions with their appropriate terms . -Control account

If Rope 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:

What should a company do to improve its accounts receivable turnover rate?

Comfort Shoes received a promissory note from a customer on April 1, 2016.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, 2016?

A company is referred to as a parent if it owns

Assuming a company uses the allowance method, the entry to recognize the write-off of the specific uncollectible accounts will act to:

Match the following definitions with their appropriate terms . -Note receivable

The amount of money received, or the fair value of the products or services received by the maker when a promissory note is issued is called the ____________________.

Which of the following statements is true regarding the two allowance methods used to account for bad debts?

The accounts receivable turnover ratio is used to evaluate how well a company does in collecting its accounts receivable.

The maker of a note recognizes a note payable on the balance sheet and interest expense on its income statement.

Which one of the following statements is true if a company's collection period for accounts receivable is unacceptably long?

The _______________ the accounts receivable turnover ratio, the quicker the each dollar of accounts receivable can be collected.

Match the following definitions with their appropriate terms . -Direct write-off method

Match the following definitions with their appropriate terms . -Debt securities

On July 1, 2016, Falcon Company received a $20,000 promissory note for services from Jordyn Company.The annual interest rate is 5%.Principal and interest are paid in cash at the maturity date of June 30, 2017. The effect on Falcon's financial statements on July 1, 2016 is as follows

Match the following definitions with their appropriate terms . -Promissory note

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 True Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Exploring Accounting Standards and Differences around the World

Filters

Exam 7: Receivables and Investments

Which one of the following is an accurate description of Allowance for Doubtful Accounts?

Changes in accounts and notes receivable are reported in the __________ Activities section of a statement of cash flows prepared using the indirect method.

Match the following definitions with their appropriate terms . -Control account

If Rope 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:

What should a company do to improve its accounts receivable turnover rate?

Comfort Shoes received a promissory note from a customer on April 1, 2016.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, 2016?

A company is referred to as a parent if it owns

Assuming a company uses the allowance method, the entry to recognize the write-off of the specific uncollectible accounts will act to:

Match the following definitions with their appropriate terms . -Note receivable

The amount of money received, or the fair value of the products or services received by the maker when a promissory note is issued is called the ____________________.

Which of the following statements is true regarding the two allowance methods used to account for bad debts?

The accounts receivable turnover ratio is used to evaluate how well a company does in collecting its accounts receivable.

The maker of a note recognizes a note payable on the balance sheet and interest expense on its income statement.

Which one of the following statements is true if a company's collection period for accounts receivable is unacceptably long?

The _______________ the accounts receivable turnover ratio, the quicker the each dollar of accounts receivable can be collected.

Match the following definitions with their appropriate terms . -Direct write-off method

Match the following definitions with their appropriate terms . -Debt securities

On July 1, 2016, Falcon Company received a $20,000 promissory note for services from Jordyn Company.The annual interest rate is 5%.Principal and interest are paid in cash at the maturity date of June 30, 2017. ​ The effect on Falcon's financial statements on July 1, 2016 is as follows

Match the following definitions with their appropriate terms . -Promissory note

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 True Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Exploring Accounting Standards and Differences around the World

Filters

On July 1, 2016, Falcon Company received a $20,000 promissory note for services from Jordyn Company.The annual interest rate is 5%.Principal and interest are paid in cash at the maturity date of June 30, 2017. The effect on Falcon's financial statements on July 1, 2016 is as follows