Question 1

The practice of placing dishonored notes receivable into accounts receivable keeps only notes that have not matured in the Notes Receivable account.

Accepted Answer

A) True 
 B)False

Question 2

When using the allowance method of accounting for uncollectible accounts,the entry to write off Harold's uncollectible account is a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable - Harold.

Accepted Answer

A) True 
 B)False

Question 3

The matching principle prescribes:

Accepted Answer

A) That expenses be ignored if their effect on the financial statements is unimportant to users' business decisions. 
B) The use of the direct write-off method for bad debts. 
C) The use of the allowance method of accounting for bad debts. 
D) That bad debts be disclosed in the financial statements. 
E) That bad debts not be written off. 
A) That expenses be ignored if their effect on the financial statements is unimportant to users' business decisions. 
B) The use of the direct write-off method for bad debts. 
C) The use of the allowance method of accounting for bad debts. 
D) That bad debts be disclosed in the financial statements. 
E) That bad debts not be written off.

Question 4

A company borrowed $6,000 by signing a 4-month promissory note at 12%.The total interest on the note is $720.

Accepted Answer

A) True 
 B)False

Question 5

When the maker of a note is unable or refuses to pay at maturity,the note is said to be ___________________.

Accepted Answer

The answer of When the maker of a note is...

Question 6

A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and their length of time past due is the:

Accepted Answer

A) Direct write-off method. 
B) Aging of accounts receivable method. 
C) Percentage of sales method. 
D) Aging of investments method. 
E) Percent of accounts receivable method. 
A) Direct write-off method. 
B) Aging of accounts receivable method. 
C) Percentage of sales method. 
D) Aging of investments method. 
E) Percent of accounts receivable method.

Question 7

A supplementary record created to maintain a separate account for each customer is called the ________________________.

Accepted Answer

accounts r

Question 8

ABC Co.sold $80,000 of accounts receivable to First Bank and incurred a 2% factoring fee.Prepare the journal entry for ABC Co.to record the sale.

Accepted Answer

The answer of ABC Co.sold $80,000 of accounts receivable to...

Question 9

When using the allowance method of accounting for uncollectible accounts,the entry to record the bad debts expense is a debit to Bad Debts Expense and a credit to Accounts Receivable.

Accepted Answer

A) True 
 B)False

Question 10

On August 9,Pierce Company receives a $8,500,90-day,8% note from customer Eric Simms as payment on his account.What entry should be made on the maturity date assuming the maker pays in full?

Accepted Answer

A) Debit Notes Receivable $8,500; debit Interest Receivable $170; credit Sales $8,670. 
B) Debit Cash $8,670; credit Interest Revenue $170; credit Notes Receivable $8,500. 
C) Debit Cash $8,628; credit Interest Revenue $128; credit Notes Receivable $8,500. 
D) Debit Cash $8,613; credit Interest Revenue $113; credit Notes Receivable $8,500 
E) Debit Cash $8 500; credit Notes Receivable $8,500. 
A) Debit Notes Receivable $8,500; debit Interest Receivable $170; credit Sales $8,670. 
B) Debit Cash $8,670; credit Interest Revenue $170; credit Notes Receivable $8,500. 
C) Debit Cash $8,628; credit Interest Revenue $128; credit Notes Receivable $8,500. 
D) Debit Cash $8,613; credit Interest Revenue $113; credit Notes Receivable $8,500 
E) Debit Cash $8 500; credit Notes Receivable $8,500.

Question 11

A company factored $45,000 of its accounts receivable and was charged a 3% factoring fee.The journal entry to record this transaction would include a:

Accepted Answer

A) Debit to Cash of $45,000, a debit to Factoring Fee Expense of $1,350, and credit to Accounts Receivable of $43,650. 
B) Debit to Cash of $45,000 and a credit to Accounts Receivable of $45,000. 
C) Debit to Cash of $43,650, a debit to Factoring Fee Expense of $1,350, and a credit to Accounts Receivable of $45,000. 
D) Debit to Cash of $46,350 and a credit to Accounts Receivable of $46,350. 
E) Debit to Cash of $45,000 and a credit to Notes Payable of $45,000. 
A) Debit to Cash of $45,000, a debit to Factoring Fee Expense of $1,350, and credit to Accounts Receivable of $43,650. 
B) Debit to Cash of $45,000 and a credit to Accounts Receivable of $45,000. 
C) Debit to Cash of $43,650, a debit to Factoring Fee Expense of $1,350, and a credit to Accounts Receivable of $45,000. 
D) Debit to Cash of $46,350 and a credit to Accounts Receivable of $46,350. 
E) Debit to Cash of $45,000 and a credit to Notes Payable of $45,000.

Question 12

Sellers allow customers to use credit cards:

Accepted Answer

A) To avoid having to evaluate a customer's credit standing for each sale. 
B) To lessen the risk of extending credit to customers who cannot pay. 
C) To speed up receipt of cash from the credit sale. 
D) To increase total sales volume. 
E) All of the options are reasons for credit card use. 
A) To avoid having to evaluate a customer's credit standing for each sale. 
B) To lessen the risk of extending credit to customers who cannot pay. 
C) To speed up receipt of cash from the credit sale. 
D) To increase total sales volume. 
E) All of the options are reasons for credit card use.

Question 13

The aging method of determining bad debts expense is based on the knowledge that the longer a receivable is past due,the lower the likelihood of collection.

Accepted Answer

A) True 
 B)False

Question 14

The process of using accounts receivable as security for a loan is known as factoring accounts receivable.

Accepted Answer

A) True 
 B)False

Question 15

Accounts receivable information for specific customers is important because it reveals:

Accepted Answer

A) How much each customer has purchased on credit. 
B) How much each customer has paid. 
C) How much each customer still owes. 
D) The basis for sending bills to customers. 
E) All of the options are valid reasons. 
A) How much each customer has purchased on credit. 
B) How much each customer has paid. 
C) How much each customer still owes. 
D) The basis for sending bills to customers. 
E) All of the options are valid reasons.

Question 16

Tepsi's accounts receivable turnover was 9.9 for this year and 11.0 for last year.Craig's turnover was 9.3 for this year and 9.3 for last year.These results imply that:

Accepted Answer

A) Craig has the better turnover for both years. 
B) Tepsi has the better turnover for both years. 
C) Craig's turnover is improving. 
D) Craig's credit policies are too loose 
E) Craig's is collecting its receivables more quickly than Tepsi in both years. 
A) Craig has the better turnover for both years. 
B) Tepsi has the better turnover for both years. 
C) Craig's turnover is improving. 
D) Craig's credit policies are too loose 
E) Craig's is collecting its receivables more quickly than Tepsi in both years.

Question 17

Newton Company uses the allowance method of accounting for uncollectible accounts.On May 3,the Newton Company wrote off the $3,000 uncollectible account of its customer,P.Best.On July 10,Newton received a check for the full amount of $3,000 from Best.On July 10,the entry or entries Newton makes to record the recovery of the bad debt is:

Accepted Answer

A)   
B)   
C)   
D)   
E)   
A)   
B)   
C)   
D)   
E)

Question 18

Receivables can be used to obtain cash by either selling them or using them as security for a loan.

Accepted Answer

A) True 
 B)False

Question 19

If a 90-day note receivable is dated June 12,what is the maturity date of the note?

Accepted Answer

The answer of If a 90-day note receivable is dated...

Question 20

The _______________________ method uses both past and current receivables to estimate the allowance amount,and assumes that the longer an amount is past due,the more likely it is to be uncollectible.

Accepted Answer

aging of a

Exam 9: Accounting for Receivables

The practice of placing dishonored notes receivable into accounts receivable keeps only notes that have not matured in the Notes Receivable account.

When using the allowance method of accounting for uncollectible accounts,the entry to write off Harold's uncollectible account is a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable - Harold.

The matching principle prescribes:

A company borrowed $6,000 by signing a 4-month promissory note at 12%.The total interest on the note is $720.

When the maker of a note is unable or refuses to pay at maturity,the note is said to be ___________________.

A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and their length of time past due is the:

A supplementary record created to maintain a separate account for each customer is called the ________________________.

ABC Co.sold $80,000 of accounts receivable to First Bank and incurred a 2% factoring fee.Prepare the journal entry for ABC Co.to record the sale.

When using the allowance method of accounting for uncollectible accounts,the entry to record the bad debts expense is a debit to Bad Debts Expense and a credit to Accounts Receivable.

On August 9,Pierce Company receives a $8,500,90-day,8% note from customer Eric Simms as payment on his account.What entry should be made on the maturity date assuming the maker pays in full?

A company factored $45,000 of its accounts receivable and was charged a 3% factoring fee.The journal entry to record this transaction would include a:

Sellers allow customers to use credit cards:

The aging method of determining bad debts expense is based on the knowledge that the longer a receivable is past due,the lower the likelihood of collection.

The process of using accounts receivable as security for a loan is known as factoring accounts receivable.

Accounts receivable information for specific customers is important because it reveals:

Tepsi's accounts receivable turnover was 9.9 for this year and 11.0 for last year.Craig's turnover was 9.3 for this year and 9.3 for last year.These results imply that:

Receivables can be used to obtain cash by either selling them or using them as security for a loan.

If a 90-day note receivable is dated June 12,what is the maturity date of the note?

The _______________________ method uses both past and current receivables to estimate the allowance amount,and assumes that the longer an amount is past due,the more likely it is to be uncollectible.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Time Value of Money B

Activity-Based Costing C

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