Question 1

Which of the following methods of recording uncollectible accounts expense would be described best as an income statement method?

Accepted Answer

A)  Both percentage of net sales method and accounts receivable aging method 
B)  Direct charge-off method 
C)  Percentage of net sales method 
D)  Accounts receivable aging method 
A)  Both percentage of net sales method and accounts receivable aging method 
B)  Direct charge-off method 
C)  Percentage of net sales method 
D)  Accounts receivable aging method

Question 2

Credit balances in customer accounts appear on the balance sheet as a current asset.

Accepted Answer

A) True 
 B)False

Question 3

In the journal provided,prepare the entries for the following transactions.(Omit explanations.)

Accepted Answer

The answer of In the journal provided,prepare the entries for...

Question 4

A debit memorandum means that an amount was added to the bank balance; a credit memorandum means that an amount was deducted.

Accepted Answer

A) True 
 B)False

Question 5

The SEC requires companies to disclose the amount of compensating balances in a note to the financial statements.

Accepted Answer

A) True 
 B)False

Question 6

The goal of a successful credit policy is to maximize the potential profit on total credit sales while

Accepted Answer

A)  limiting credit losses to an acceptable level. 
B)  minimizing the number of credit customers. 
C)  keeping credit sales as low as possible. 
D)  selling only to customers who will pay. 
A)  limiting credit losses to an acceptable level. 
B)  minimizing the number of credit customers. 
C)  keeping credit sales as low as possible. 
D)  selling only to customers who will pay.

Question 7

What is a compensating balance? By whom is it required?

Accepted Answer

A compensating balance is a mi

Question 8

Cash consists of all of the following except

Accepted Answer

A)  deposits in checking accounts. 
B)  checks from customers. 
C)  compensating balances. 
D)  receivables from customers. 
A)  deposits in checking accounts. 
B)  checks from customers. 
C)  compensating balances. 
D)  receivables from customers.

Question 9

When an individual uses a debit card to make a purchase,the amount of the purchase is deducted directly from that individual's bank account.

Accepted Answer

A) True 
 B)False

Question 10

A company's acceptance of credits cards,like MasterCard,is an example of factoring with recourse.

Accepted Answer

A) True 
 B)False

Question 11

The allowance for uncollectible accounts is necessary because

Accepted Answer

A)  a liability results when a credit sale is made. 
B)  when recording uncollectible accounts expense,it is not possible to predict specifically which accounts will not be collected. 
C)  management should know how many credit losses have been sustained over the years. 
D)  uncollected accounts that are written off must be accumulated in a separate account. 
A)  a liability results when a credit sale is made. 
B)  when recording uncollectible accounts expense,it is not possible to predict specifically which accounts will not be collected. 
C)  management should know how many credit losses have been sustained over the years. 
D)  uncollected accounts that are written off must be accumulated in a separate account.

Question 12

A company performs the aging of accounts receivable calculation and arrives at an estimate for uncollectible accounts of $800.If Allowance for Uncollectible Accounts has a debit balance of $300 prior to the year-end adjustment,for how much should the adjustment be journalized?
a.$1,100
b.$800
c.$300
d.$5,500

Accepted Answer

The answer of A company performs the aging of accounts...

Question 13

Assume that on December 1,a note which has a face value of $1,000,bears interest at 6 percent for 90 days,received from a customer as an extension of his of past-due account is honored on due date.The entry that would be made to record the receipt on due date (ignoring interest)is:

Accepted Answer

A)  Notes receivable 1,000
Cash 1,000 
B)  Accounts receivable 1,000
Cash 1,000 
C)  Accounts receivable 1,000
Notes receivable 1,000 
D)  Cash 1,000
Notes receivable 1,000 
A)  Notes receivable 1,000
Cash 1,000 
B)  Accounts receivable 1,000
Cash 1,000 
C)  Accounts receivable 1,000
Notes receivable 1,000 
D)  Cash 1,000
Notes receivable 1,000

Question 14

Sally's Dress Shop has $5,200 in Accounts Receivable at December 31.The company's accountant estimates that $300 of the $5,200 will never be collected.Complete the current asset section of the balance sheet below.

Accepted Answer

The answer of Sally's Dress Shop has $5,200 in Accounts...

Question 15

One might infer from a debit balance in Allowance for Uncollectible Accounts that

Accepted Answer

A)  a posting error has been made. 
B)  Uncollectible Accounts Expense has been overestimated. 
C)  the accounts receivable aging method apparently is being used. 
D)  more has been written off than had been estimated. 
A)  a posting error has been made. 
B)  Uncollectible Accounts Expense has been overestimated. 
C)  the accounts receivable aging method apparently is being used. 
D)  more has been written off than had been estimated.

Question 16

Interest on a nine-month,9 percent,$4,000 note is calculated by multiplying $4,000 * 9/100 * 9/12.

Accepted Answer

A) True 
 B)False

Question 17

Match each definition with the correct term below.
-Accounts receivable aging method

Accepted Answer

A) One way to control a cash fund and cash advances. 
B) A minimum amount that a bank requires a company to keep in its bank account as part of a credit-granting arrangement. 
C) The method of estimating uncollectible accounts that calculates the Uncollectible Accounts Expense. 
D) The process of accounting for the difference between the balance on a company's bank statement and the balance in its Cash account. 
E) The total proceeds of a promissory note.
F)An unconditional promise to pay a definite sum of money on demand or at a future date.
G)The method of accounting for uncollectible accounts that matches bad debts against the sales they help produce.
H)Short-term financial assets that arise from credit sales made in the ordinary course of doing business.
I)A method of conducting business transactions that does not involve the actual transfer of cash.
J)The cost of borrowing money or the return on lending money.
K)A potential liability that can develop into a real liability if a particular event occurs.
L)The method of estimating uncollectible accounts that calculates the targeted balance of Allowance for Uncollectible Accounts. 
A) One way to control a cash fund and cash advances. 
B) A minimum amount that a bank requires a company to keep in its bank account as part of a credit-granting arrangement. 
C) The method of estimating uncollectible accounts that calculates the Uncollectible Accounts Expense. 
D) The process of accounting for the difference between the balance on a company's bank statement and the balance in its Cash account. 
E) The total proceeds of a promissory note.
F)An unconditional promise to pay a definite sum of money on demand or at a future date.
G)The method of accounting for uncollectible accounts that matches bad debts against the sales they help produce.
H)Short-term financial assets that arise from credit sales made in the ordinary course of doing business.
I)A method of conducting business transactions that does not involve the actual transfer of cash.
J)The cost of borrowing money or the return on lending money.
K)A potential liability that can develop into a real liability if a particular event occurs.
L)The method of estimating uncollectible accounts that calculates the targeted balance of Allowance for Uncollectible Accounts.

Question 18

Under discounting,a company sells its receivables in batches at a discount.

Accepted Answer

A) True 
 B)False

Question 19

When the direct method is used,the write-off of an account receivable results in an expense at the time of write-off.

Accepted Answer

A) True 
 B)False

Question 20

Compute the correct amount for each letter in the following table:

Accepted Answer

a.$17,400 ($13,800 + $6,000 -

Which of the following methods of recording uncollectible accounts expense would be described best as an income statement method?

Credit balances in customer accounts appear on the balance sheet as a current asset.

In the journal provided,prepare the entries for the following transactions.(Omit explanations.)

A debit memorandum means that an amount was added to the bank balance; a credit memorandum means that an amount was deducted.

The SEC requires companies to disclose the amount of compensating balances in a note to the financial statements.

The goal of a successful credit policy is to maximize the potential profit on total credit sales while

What is a compensating balance? By whom is it required?

Cash consists of all of the following except

When an individual uses a debit card to make a purchase,the amount of the purchase is deducted directly from that individual's bank account.

A company's acceptance of credits cards,like MasterCard,is an example of factoring with recourse.

The allowance for uncollectible accounts is necessary because

Assume that on December 1,a note which has a face value of $1,000,bears interest at 6 percent for 90 days,received from a customer as an extension of his of past-due account is honored on due date.The entry that would be made to record the receipt on due date (ignoring interest)is:

Sally's Dress Shop has $5,200 in Accounts Receivable at December 31.The company's accountant estimates that $300 of the $5,200 will never be collected.Complete the current asset section of the balance sheet below.

One might infer from a debit balance in Allowance for Uncollectible Accounts that

Interest on a nine-month,9 percent,$4,000 note is calculated by multiplying $4,000 * 9/100 * 9/12.

Match each definition with the correct term below. -Accounts receivable aging method

Under discounting,a company sells its receivables in batches at a discount.

When the direct method is used,the write-off of an account receivable results in an expense at the time of write-off.

Compute the correct amount for each letter in the following table:

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Inventories

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Investments

Filters

Exam 8: Cash and Receivables

Which of the following methods of recording uncollectible accounts expense would be described best as an income statement method?

Credit balances in customer accounts appear on the balance sheet as a current asset.

In the journal provided,prepare the entries for the following transactions.(Omit explanations.)

A debit memorandum means that an amount was added to the bank balance; a credit memorandum means that an amount was deducted.

The SEC requires companies to disclose the amount of compensating balances in a note to the financial statements.

The goal of a successful credit policy is to maximize the potential profit on total credit sales while

What is a compensating balance? By whom is it required?

Cash consists of all of the following except

When an individual uses a debit card to make a purchase,the amount of the purchase is deducted directly from that individual's bank account.

A company's acceptance of credits cards,like MasterCard,is an example of factoring with recourse.

The allowance for uncollectible accounts is necessary because

Assume that on December 1,a note which has a face value of $1,000,bears interest at 6 percent for 90 days,received from a customer as an extension of his of past-due account is honored on due date.The entry that would be made to record the receipt on due date (ignoring interest)is:

Sally's Dress Shop has $5,200 in Accounts Receivable at December 31.The company's accountant estimates that $300 of the $5,200 will never be collected.Complete the current asset section of the balance sheet below.

One might infer from a debit balance in Allowance for Uncollectible Accounts that

Interest on a nine-month,9 percent,$4,000 note is calculated by multiplying $4,000 * 9/100 * 9/12.

Match each definition with the correct term below. -Accounts receivable aging method

Under discounting,a company sells its receivables in batches at a discount.

When the direct method is used,the write-off of an account receivable results in an expense at the time of write-off.

Compute the correct amount for each letter in the following table:

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Inventories

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Investments

Filters