Question 1

When the allowance method is used to account for uncollectible accounts, the net amount of accounts receivable

Accepted Answer

A)  Increases when an account is written off as uncollectible 
B)  Decreases when an account is written off as uncollectible 
C)  Stays the same when an account is written off as uncollectible 
D)  Is sometimes increased and sometimes decreased when an account is written off as uncollectible 
A)  Increases when an account is written off as uncollectible 
B)  Decreases when an account is written off as uncollectible 
C)  Stays the same when an account is written off as uncollectible 
D)  Is sometimes increased and sometimes decreased when an account is written off as uncollectible

Question 2

A U.S. company makes a sale to a Brazilian company for 10,000 reais on March 15. The Brazilian company will pay on May 1. The exchange rate on March 15 is 1 real = $0.529 and on May 1 is 1 real = $0.480. The average rate was 1 real = $0.505. The U.S. company will receive cash on May 1 of

Accepted Answer

A)  $4,800 
B)  $5,290 
C)  $5,050 
D)  None of these are correct 
A)  $4,800 
B)  $5,290 
C)  $5,050 
D)  None of these are correct

Question 3

Estimated warranty costs associated with sales should be expensed to properly

Accepted Answer

A)  Recognize revenue 
B)  Follow the historical cost concept 
C)  Match revenues and expenses 
D)  Satisfy SEC requirements 
A)  Recognize revenue 
B)  Follow the historical cost concept 
C)  Match revenues and expenses 
D)  Satisfy SEC requirements

Question 4

Based on the aging of its accounts receivable at December 31, Charman Company determined that the net realizable value of the receivables at that date is $304,000. Additional information is as follows:   Charman's Bad Debt Expense for the year ended December 31 is

Accepted Answer

A)  $32,000 
B)  $38,400 
C)  $48,000 
D)  $64,000 
A)  $32,000 
B)  $38,400 
C)  $48,000 
D)  $64,000

Question 5

You have just analyzed customers' accounts receivable through an "aging" process and have determined that $3,000 of the accounts receivable are probably uncollectible. Noting that your trial balance shows an Allowance for Bad Debts with a debit balance of $100, what is the correct adjusting entry?

Accepted Answer

A) 
$\begin{array}{ll}
\text { Bad Debt Expense } & 3,100 \
\text { Allowance for Bad Debts } & 3,100
\end{array}$ 
B) 
$\begin{array}{cc}
\text { Allowance for Bad Debts } & 3,100 \
\text { Bad Debt Expense } & 3,100
\end{array}$ 
C)  
$\begin{array}{cc}
\text { Allowance for Bad Debts } & 3,000 \
\text { Bad Debt Expense } & 3,000
\end{array}$ 
D) 
$\begin{array}{ll}
\text { Bad Debt Expense } & 2,900 \
\text { Allowance for Bad Debts } & 2,900
\end{array}$ 
A) 
$\begin{array}{ll}
\text { Bad Debt Expense } & 3,100 \
\text { Allowance for Bad Debts } & 3,100
\end{array}$ 
B) 
$\begin{array}{cc}
\text { Allowance for Bad Debts } & 3,100 \
\text { Bad Debt Expense } & 3,100
\end{array}$ 
C)  
$\begin{array}{cc}
\text { Allowance for Bad Debts } & 3,000 \
\text { Bad Debt Expense } & 3,000
\end{array}$ 
D) 
$\begin{array}{ll}
\text { Bad Debt Expense } & 2,900 \
\text { Allowance for Bad Debts } & 2,900
\end{array}$

Question 6

In preparing its bank reconciliation for the month of February, Jesse Company has available the following information:   What is the corrected cash balance at February 28?

Accepted Answer

A)  $20,025 
B)  $20,050 
C)  $20,175 
D)  $20,300 
A)  $20,025 
B)  $20,050 
C)  $20,175 
D)  $20,300

Question 7

Thorpe Company has prepared the following partial bank reconciliation for January 2012:   Given this information, how much interest was earned? (Assume there are no other adjustments.)

Accepted Answer

A)  $170 
B)  $340 
C)  $510 
D)  $680 
A)  $170 
B)  $340 
C)  $510 
D)  $680

Question 8

Dana Company's December 31, 2012, financial statements showed the following:
  
-Refer to Exhibit 6-1. Given the information above, Dana Company's average collection period (rounded) for 2012 was

Accepted Answer

A)  52 days 
B)  46 days 
C)  83 days 
D)  61 days 
A)  52 days 
B)  46 days 
C)  83 days 
D)  61 days

Question 9

In calculating a company's accounts receivable turnover ratio, which of the following sets of factors would be used?

Accepted Answer

A)  Net income and average accounts receivable 
B)  Total assets and average accounts receivable 
C)  Total accounts receivable and sales revenue 
D)  Sales revenue and average accounts receivable 
A)  Net income and average accounts receivable 
B)  Total assets and average accounts receivable 
C)  Total accounts receivable and sales revenue 
D)  Sales revenue and average accounts receivable

Question 10

When the direct write-off method of recognizing bad debt expense is used, the entry to write off a specific customer account would

Accepted Answer

A)  Increase net income 
B)  Have no effect on net income 
C)  Increase the accounts receivable balance and increase net income 
D)  Decrease the accounts receivable balance and decrease net income 
A)  Increase net income 
B)  Have no effect on net income 
C)  Increase the accounts receivable balance and increase net income 
D)  Decrease the accounts receivable balance and decrease net income

Question 11

The December 31 trial balance of Humming Company included the following accounts:   If it is estimated that 1 percent of the net sales is uncollectible, the entry to record the estimate of bad debts would include a debit to Bad Debt Expense for

Accepted Answer

A)  $2,000 
B)  $1,130 
C)  $3,250 
D)  $3,130 
A)  $2,000 
B)  $1,130 
C)  $3,250 
D)  $3,130

Question 12

Amy Company sold $8,000 of merchandise to Tory Turnbull with terms 2/10, n/30. If Tory paid for three-fourths of the merchandise within the discount period and one-fourth after the discount period, he paid a total of

Accepted Answer

A)  $7,840 
B)  $7,880 
C)  $7,920 
D)  $7,960 
A)  $7,840 
B)  $7,880 
C)  $7,920 
D)  $7,960

Question 13

Which type of the major activities of a business are best described as those events that raise money by means other than operations?

Accepted Answer

A)  Financing activities 
B)  Operating activities 
C)  Investing activities 
D)  Earning activities 
A)  Financing activities 
B)  Operating activities 
C)  Investing activities 
D)  Earning activities

Question 14

The major activities of a business include all BUT which of the following?

Accepted Answer

A)  Financing activities 
B)  Operating activities 
C)  Investing activities 
D)  Earning activities 
A)  Financing activities 
B)  Operating activities 
C)  Investing activities 
D)  Earning activities

Question 15

The ratio that is an attempt to determine how many times, in a year, a company collects its receivables is the

Accepted Answer

A)  Average collection period 
B)  Accounts receivable turnover 
C)  Inventory turnover 
D)  Accounts receivable collected 
A)  Average collection period 
B)  Accounts receivable turnover 
C)  Inventory turnover 
D)  Accounts receivable collected

Question 16

The entry to record estimated service expenses related to sales would include a

Accepted Answer

A)  Credit to Sales Revenue 
B)  Debit to Sales Revenue 
C)  Debit to Estimated Liability for Service 
D)  Credit to Estimated Liability for Service 
A)  Credit to Sales Revenue 
B)  Debit to Sales Revenue 
C)  Debit to Estimated Liability for Service 
D)  Credit to Estimated Liability for Service

Question 17

JR Corporation has a debit balance of $3,750 in Allowance for Bad Debts. If it estimates that 2 percent of the net sales of $1,500,000 will be uncollectible, it should debit

Accepted Answer

A)  Allowance for Bad Debts for $30,000 
B)  Allowance for Bad Debts for $33,750 
C)  Bad Debt Expense for $33,750 
D)  Bad Debt Expense for $30,000 
A)  Allowance for Bad Debts for $30,000 
B)  Allowance for Bad Debts for $33,750 
C)  Bad Debt Expense for $33,750 
D)  Bad Debt Expense for $30,000

Question 18

Penn Inc. reported an allowance for bad debts of $30,000 (debit) at December 31, before performing an aging of accounts receivable. As a result of the aging, Penn Inc. determined that an estimated $52,000 of the December 31, accounts receivable would prove uncollectible. The adjusting entry required at December 31, would be

Accepted Answer

A)  
$\begin{array}{lr}
\text { Bad Debt Expense } & 52,000 \
\text { Allowance for Bad Debts } & 52,000
\end{array}$ 
B)  
$\begin{array}{cr}
\text { Allowance for Bad Debts } & 52,000 \
\text { Accounts Receivable } & 52,000
\end{array}$ 
C)  
Bad Debt Expense $\quad 82,000$
Allowance for Bad Debts $\quad 82,000$ 
D)  
$\begin{array}{lr}
\text { Allowance for Bad Debts } & 82,000 \
\text { Bad Debt Expense } & 82,000
\end{array}$ 
A)  
$\begin{array}{lr}
\text { Bad Debt Expense } & 52,000 \
\text { Allowance for Bad Debts } & 52,000
\end{array}$ 
B)  
$\begin{array}{cr}
\text { Allowance for Bad Debts } & 52,000 \
\text { Accounts Receivable } & 52,000
\end{array}$ 
C)  
Bad Debt Expense $\quad 82,000$
Allowance for Bad Debts $\quad 82,000$ 
D)  
$\begin{array}{lr}
\text { Allowance for Bad Debts } & 82,000 \
\text { Bad Debt Expense } & 82,000
\end{array}$

Question 19

Which of the following is NOT a cash control procedure?

Accepted Answer

A)  Separate the handling and recording of cash 
B)  Deposit all cash receipts daily 
C)  Make all cash disbursements by check 
D)  Invest excess cash in high-yielding securities 
A)  Separate the handling and recording of cash 
B)  Deposit all cash receipts daily 
C)  Make all cash disbursements by check 
D)  Invest excess cash in high-yielding securities

Question 20

Samson Corporation had sales of $1,000,000 during 2012, of which 60 percent were on credit. On December 31, 2012, Accounts Receivable totaled $80,000, and Allowance for Bad Debts had a credit balance of $1,200. Given this information, if uncollectible receivables are estimated to be 1/2 of 1 percent of credit sales, the adjusting entry to account for uncollectible receivables as of December 31, 2012, would include a

Accepted Answer

A)  Debit to Bad Debt Expense of $3,000 
B)  Debit to Bad Debt Expense of $1,800 
C)  Credit to Bad Debt Expense of $3,000 
D)  Credit to Allowance for Bad Debts of $5,000 
A)  Debit to Bad Debt Expense of $3,000 
B)  Debit to Bad Debt Expense of $1,800 
C)  Credit to Bad Debt Expense of $3,000 
D)  Credit to Allowance for Bad Debts of $5,000

Exam 6: Receivables: Selling a Product or a Service

When the allowance method is used to account for uncollectible accounts, the net amount of accounts receivable

A U.S. company makes a sale to a Brazilian company for 10,000 reais on March 15. The Brazilian company will pay on May 1. The exchange rate on March 15 is 1 real = $0.529 and on May 1 is 1 real = $0.480. The average rate was 1 real = $0.505. The U.S. company will receive cash on May 1 of

Estimated warranty costs associated with sales should be expensed to properly

Based on the aging of its accounts receivable at December 31, Charman Company determined that the net realizable value of the receivables at that date is $304,000. Additional information is as follows: Charman's Bad Debt Expense for the year ended December 31 is

You have just analyzed customers' accounts receivable through an "aging" process and have determined that $3,000 of the accounts receivable are probably uncollectible. Noting that your trial balance shows an Allowance for Bad Debts with a debit balance of $100, what is the correct adjusting entry?

In preparing its bank reconciliation for the month of February, Jesse Company has available the following information: What is the corrected cash balance at February 28?

Thorpe Company has prepared the following partial bank reconciliation for January 2012: Given this information, how much interest was earned? (Assume there are no other adjustments.)

Dana Company's December 31, 2012, financial statements showed the following: -Refer to Exhibit 6-1. Given the information above, Dana Company's average collection period (rounded) for 2012 was

In calculating a company's accounts receivable turnover ratio, which of the following sets of factors would be used?

When the direct write-off method of recognizing bad debt expense is used, the entry to write off a specific customer account would

The December 31 trial balance of Humming Company included the following accounts: If it is estimated that 1 percent of the net sales is uncollectible, the entry to record the estimate of bad debts would include a debit to Bad Debt Expense for

Amy Company sold $8,000 of merchandise to Tory Turnbull with terms 2/10, n/30. If Tory paid for three-fourths of the merchandise within the discount period and one-fourth after the discount period, he paid a total of

Which type of the major activities of a business are best described as those events that raise money by means other than operations?

The major activities of a business include all BUT which of the following?

The ratio that is an attempt to determine how many times, in a year, a company collects its receivables is the

The entry to record estimated service expenses related to sales would include a

JR Corporation has a debit balance of $3,750 in Allowance for Bad Debts. If it estimates that 2 percent of the net sales of $1,500,000 will be uncollectible, it should debit

Which of the following is NOT a cash control procedure?

Accounting Information: Users and Uses

Financial Statements: An Overview

The Accounting Cycle: The Mechanics of Accounting

Completing the Accounting Cycle

Internal Controls: Ensuring the Integrity of Financial Information

Inventory and the Cost of Sales

Completing the Operating Cycle

Investments: Property, Plant, and Equipment and Intangible Assets

Financing: Long-Term Liabilities

Financing: Equity

Investments: Debt and Equity Securities

Statement of Cash Flows

Analyzing Financial Statements

Management Accounting and Cost Concepts

Cost Flows and Business Organizations

Activity-Based Costing

Budgeting and Control

Controlling Cost and Profit

Inventory Management and Variable and Absorption Costing

Cost Behavior and Decisions Using C-V-P Analysis

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

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