Question 1

The direct write-off method estimates the amount of bad debts before they occur.

Accepted Answer

A) True 
 B)False

Question 2

When Company X buys stock in Company Y, Company X is referred to as the investee.

Accepted Answer

A) True 
 B)False

Question 3

When a note receivable has been discounted by a company

Accepted Answer

A)  An account called discount on notes receivable is used. 
B)  It will be shown as an asset of the company. 
C)  It slows the collection process. 
D)  It may be shown as a contingent liability in the footnotes. 
A)  An account called discount on notes receivable is used. 
B)  It will be shown as an asset of the company. 
C)  It slows the collection process. 
D)  It may be shown as a contingent liability in the footnotes.

Question 4

Which one of the following statements is true?

Accepted Answer

A)  When a company uses a subsidiary ledger, the balance in the control account, Accounts Receivable, shows only the amount the company expects to collect from the accounts receivable, net of any expected uncollectible accounts. 
B)  An accounts receivable subsidiary ledger represents amounts due to vendors and suppliers. 
C)  The balance in the control account, Accounts Receivable, should be equal to the sum of the balances in the subsidiary ledger for accounts receivable. 
D)  A subsidiary ledger takes the place of the control account for some companies. 
A)  When a company uses a subsidiary ledger, the balance in the control account, Accounts Receivable, shows only the amount the company expects to collect from the accounts receivable, net of any expected uncollectible accounts. 
B)  An accounts receivable subsidiary ledger represents amounts due to vendors and suppliers. 
C)  The balance in the control account, Accounts Receivable, should be equal to the sum of the balances in the subsidiary ledger for accounts receivable. 
D)  A subsidiary ledger takes the place of the control account for some companies.

Question 5

Over the life of a note, the maker of a note recognizes ____________ on the balance sheet and _____________ on the income statement.

Accepted Answer

Note payab

Question 6

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 7

Why do businesses invest in short-term investments?

Accepted Answer

A)  They are trying to gain control over the activities of other companies. 
B)  They are investing excess cash to meet future business operation or investment needs. 
C)  They are lending money to companies that cannot obtain bank loans. 
D)  More than one of the above is correct. 
A)  They are trying to gain control over the activities of other companies. 
B)  They are investing excess cash to meet future business operation or investment needs. 
C)  They are lending money to companies that cannot obtain bank loans. 
D)  More than one of the above is correct.

Question 8

Under the allowance method of accounting for bad debts, the company estimates the amount of bad debts before those debts actually occur.

Accepted Answer

A) True 
 B)False

Question 9

One of the problems with the use of the allowance method to account for bad debts is that it often violates the matching principle.

Accepted Answer

A) True 
 B)False

Question 10

What is the impact on the cash flow statement from an increase in short-term notes receivable, assuming the indirect method is used?

Accepted Answer

A)  A decrease in the cash flow from operating activities 
B)  An increase in the cash flow from operating activities 
C)  An increase in the cash flow from financing activities 
D)  An increase in the cash flow from investing activities 
A)  A decrease in the cash flow from operating activities 
B)  An increase in the cash flow from operating activities 
C)  An increase in the cash flow from financing activities 
D)  An increase in the cash flow from investing activities

Question 11

The maker of a note recognizes ____________________ on its income statement.

Accepted Answer

The answer of The maker of a note recognizes ____________________...

Question 12

Utah Co.sold merchandise to Big Sky Corp.on December 1, 2016, for $9,000, and accepted a promissory note for payment in the same amount.The note has a term of 90 days and a stated interest rate of 8%.Utah's accounting period ends on December 31.What amount should Utah recognize as interest revenue on December 31, 2016 (if a 360 day year is assumed)?

Accepted Answer

A)  $ -0- 
B)  $ 60 
C)  $120 
D)  $180 
A)  $ -0- 
B)  $ 60 
C)  $120 
D)  $180

Question 13

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

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 14

Whether investments are reported as current assets or noncurrent assets depends on the company's intent.

Accepted Answer

A) True 
 B)False

Question 15

Allowance for Doubtful Accounts represents:

Accepted Answer

A)  Cash set aside to make up for bad debt losses 
B)  The amount of uncollectible accounts written off to date 
C)  The difference between total sales made on credit and the amount collected from those credit sales 
D)  The difference between the gross amount of accounts receivable and the net realizable value of accounts receivable 
A)  Cash set aside to make up for bad debt losses 
B)  The amount of uncollectible accounts written off to date 
C)  The difference between total sales made on credit and the amount collected from those credit sales 
D)  The difference between the gross amount of accounts receivable and the net realizable value of accounts receivable

Question 16

A general ledger account that is supported by a subsidiary ledger is called a(n) ____________________.

Accepted Answer

The answer of A general ledger account that is supported...

Question 17

When a company discounts a promissory note at the bank, it receives cash at the same time it would if it held the note to maturity.

Accepted Answer

A) True 
 B)False

Question 18

The entry required to recognize the bad debts expense for 2016 will act to:

Accepted Answer

A)  Increase total assets and retained earnings 
B)  Decrease total assets and retained earnings 
C)  Decrease total assets and increase net income 
D)  Increase total assets and decrease net income 
A)  Increase total assets and retained earnings 
B)  Decrease total assets and retained earnings 
C)  Decrease total assets and increase net income 
D)  Increase total assets and decrease net income

Question 19

Both stock and bond investments have maturity dates.

Accepted Answer

A) True 
 B)False

Question 20

Utah Co.sold merchandise to Big Sky Corp.on December 1, 2016, for $9,000, and accepted a promissory note for payment in the same amount.The note has a term of 90 days and a stated interest rate of 8%.Utah's accounting period ends on December 31. What is the actual maturity date of the note?

Accepted Answer

A)  December 31, 2016 
B)  January 29, 2017 
C)  February 28, 2017 
D)  March 1, 2017 
A)  December 31, 2016 
B)  January 29, 2017 
C)  February 28, 2017 
D)  March 1, 2017

The direct write-off method estimates the amount of bad debts before they occur.

When Company X buys stock in Company Y, Company X is referred to as the investee.

When a note receivable has been discounted by a company

Which one of the following statements is true?

Over the life of a note, the maker of a note recognizes on the balance sheet and _ on the income statement.

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

Why do businesses invest in short-term investments?

Under the allowance method of accounting for bad debts, the company estimates the amount of bad debts before those debts actually occur.

One of the problems with the use of the allowance method to account for bad debts is that it often violates the matching principle.

What is the impact on the cash flow statement from an increase in short-term notes receivable, assuming the indirect method is used?

The maker of a note recognizes ____________________ on its income statement.

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

Whether investments are reported as current assets or noncurrent assets depends on the company's intent.

Allowance for Doubtful Accounts represents:

A general ledger account that is supported by a subsidiary ledger is called a(n) ____________________.

When a company discounts a promissory note at the bank, it receives cash at the same time it would if it held the note to maturity.

The entry required to recognize the bad debts expense for 2016 will act to:

Both stock and bond investments have maturity dates.

Utah Co.sold merchandise to Big Sky Corp.on December 1, 2016, for $9,000, and accepted a promissory note for payment in the same amount.The note has a term of 90 days and a stated interest rate of 8%.Utah's accounting period ends on December 31. What is the actual maturity date of the 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

The direct write-off method estimates the amount of bad debts before they occur.

When Company X buys stock in Company Y, Company X is referred to as the investee.

When a note receivable has been discounted by a company

Which one of the following statements is true?

Over the life of a note, the maker of a note recognizes ____________ on the balance sheet and _____________ on the income statement.

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

Why do businesses invest in short-term investments?

Under the allowance method of accounting for bad debts, the company estimates the amount of bad debts before those debts actually occur.

One of the problems with the use of the allowance method to account for bad debts is that it often violates the matching principle.

What is the impact on the cash flow statement from an increase in short-term notes receivable, assuming the indirect method is used?

The maker of a note recognizes ____________________ on its income statement.

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

Whether investments are reported as current assets or noncurrent assets depends on the company's intent.

Allowance for Doubtful Accounts represents:

A general ledger account that is supported by a subsidiary ledger is called a(n) ____________________.

When a company discounts a promissory note at the bank, it receives cash at the same time it would if it held the note to maturity.

The entry required to recognize the bad debts expense for 2016 will act to:

Both stock and bond investments have maturity dates.

Utah Co.sold merchandise to Big Sky Corp.on December 1, 2016, for $9,000, and accepted a promissory note for payment in the same amount.The note has a term of 90 days and a stated interest rate of 8%.Utah's accounting period ends on December 31. What is the actual maturity date of the 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

Over the life of a note, the maker of a note recognizes on the balance sheet and _ on the income statement.