Question 1

Which of the following statements is TRUE?

Accepted Answer

A)  Accounts receivable are more liquid than cash. 
B)  Notes receivable are always due in 30 days. 
C)  Notes receivable are longer in term than accounts receivable. 
D)  Accounts receivable are liabilities. 
A)  Accounts receivable are more liquid than cash. 
B)  Notes receivable are always due in 30 days. 
C)  Notes receivable are longer in term than accounts receivable. 
D)  Accounts receivable are liabilities.

Question 2

The acid-test ratio is also known as the quick ratio.

Accepted Answer

A) True 
 B)False

Question 3

The direct write-off method conforms to the matching principle better than the allowance method.

Accepted Answer

A) True 
 B)False

Question 4

On December 1,2013,Parsons Sales sold machinery to a customer for $2,000.The customer could not pay at the time of sale,but agreed to pay 9 months later,and signed a 9-month note at 12% interest.Please provide the accrual entry needed at December 31,2013.
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\end{array}$$

Accepted Answer

Calculations: ($2,0

Question 5

Which of the following is TRUE of days' sales in receivables?

Accepted Answer

A)  Days' sales in receivables measures how many days it takes to order and receive inventory. 
B)  Days' sales in receivables measures how frequently during the year the accounts receivable are collected. 
C)  Days' sales in receivables measures how many days it takes to sell inventory. 
D)  Days' sales in receivables measures how slowly the inventory is depreciated. 
A)  Days' sales in receivables measures how many days it takes to order and receive inventory. 
B)  Days' sales in receivables measures how frequently during the year the accounts receivable are collected. 
C)  Days' sales in receivables measures how many days it takes to sell inventory. 
D)  Days' sales in receivables measures how slowly the inventory is depreciated.

Question 6

A newly created design business called Smart Art is just finishing up its first year of operations.During the year,there were credit sales of $40,000 and collections of $36,000.One account for $650 was written off.Smart Art uses the aging method to account for uncollectible account expense,and has calculated an amount of $200 as their estimate of uncollectible amounts at year-end.Show the journal entry required to record Uncollectible account expense at the end of the year.
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\end{array}$$

Accepted Answer

Calculations: $200

Question 7

Interest revenue must be reported for a note receivable that is outstanding at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Question 8

The Allowance for uncollectible accounts currently has a debit balance of $200.The company's management estimates that 2.5% of net credit sales will be uncollectible.Net credit sales are $115,000.What will be the amount of Uncollectible accounts expense reported on the income statement?

Accepted Answer

A)  $2,675 
B)  $2,875 
C)  $3,275 
D)  $3,075 
A)  $2,675 
B)  $2,875 
C)  $3,275 
D)  $3,075

Question 9

When a company is using the direct write-off method,and an account is written off,the journal entry consists of a:

Accepted Answer

A)  debit to Accounts receivable and a credit to Cash. 
B)  credit to Accounts receivable and a debit to Uncollectible accounts expense. 
C)  debit to the Allowance for uncollectible accounts and a credit to Accounts receivable. 
D)  credit Accounts receivable and a debit to Interest expense. 
A)  debit to Accounts receivable and a credit to Cash. 
B)  credit to Accounts receivable and a debit to Uncollectible accounts expense. 
C)  debit to the Allowance for uncollectible accounts and a credit to Accounts receivable. 
D)  credit Accounts receivable and a debit to Interest expense.

Question 10

The following information is from the 2013 records of Armadillo Camera Shop: $$\begin{array} { | l | r | } 
\hline \text { Accounts receivable, December 31,2013 } & \$ 20,000 \text { (debit) } \
\hline \begin{array} { l } 
\text { Allowance for uncollectible accounts, December 31,2013 } \
\text { prior to adjustment }
\end{array} & 600 \text { (debit) } \
\hline \text { Net credit sales for 2013 } & 95,000 \
\hline \text { Accounts written off as uncollectible during 2013 } & 7,000 \
\hline \text { Cash sales during 2013 } & 27,000 \
\hline
\end{array}$$
- Uncollectible accounts expense is estimated by the aging-of-accounts-receivable method.Management estimates that $2,850 of accounts receivable will be uncollectible.Which of the following will be the balance of the Allowance for uncollectible accounts after adjustment?

Accepted Answer

A)  $2,850 
B)  $3,450 
C)  $7,000 
D)  $2,250 
A)  $2,850 
B)  $3,450 
C)  $7,000 
D)  $2,250

Question 11

Which of the following is NOT one of the benefits of a business accepting credit cards from their customers?

Accepted Answer

A)  The business doesn't take the risk of the customer failing to pay. 
B)  The business can attract more customers and more sales. 
C)  The business earns a higher profit on credit card sales than cash sales. 
D)  The business does not have to check the credit ratings of customers. 
A)  The business doesn't take the risk of the customer failing to pay. 
B)  The business can attract more customers and more sales. 
C)  The business earns a higher profit on credit card sales than cash sales. 
D)  The business does not have to check the credit ratings of customers.

Question 12

Which of the following entries would be used to account for uncollectible receivables using the direct write-off method?

Accepted Answer

A)  Uncollectible accounts expense is debited and Accounts receivable is credited. 
B)  Allowance for uncollectible accounts is debited and Uncollectible accounts expense is credited. 
C)  Accounts receivable is debited and Uncollectible accounts expense is credited. 
D)  Uncollectible accounts expense is debited and Allowance for uncollectible accounts is credited. 
A)  Uncollectible accounts expense is debited and Accounts receivable is credited. 
B)  Allowance for uncollectible accounts is debited and Uncollectible accounts expense is credited. 
C)  Accounts receivable is debited and Uncollectible accounts expense is credited. 
D)  Uncollectible accounts expense is debited and Allowance for uncollectible accounts is credited.

Question 13

The ratio that indicates how many days,on average,it takes to collect the receivables is known as the days' sales in receivables.

Accepted Answer

A) True 
 B)False

Question 14

A newly created design business called Smart Art is just finishing up its first year of operations.During the year,there were credit sales of $40,000 and collections of $36,000.One account for $650 was written off.Smart Art uses the aging method to account for uncollectible account expense,and has calculated an amount of $200 as their estimate of uncollectible amounts at year-end.
-At the end of the year,what is the ending balance in Accounts receivable?

Accepted Answer

A)  $4,000 
B)  $36,000 
C)  $3,350 
D)  $39,350 
A)  $4,000 
B)  $36,000 
C)  $3,350 
D)  $39,350

Question 15

A newly created design business called Smart Art is just finishing up its first year of operations.During the year,there were credit sales of $40,000 and collections of $36,000.One account for $650 was written off.Smart Art uses the aging method to account for uncollectible account expense,and has calculated an amount of $200 as their estimate of uncollectible amounts at year-end.
-At the end of the year,what is the ending balance in the Allowance for uncollectible accounts?

Accepted Answer

A)  $150 
B)  $800 
C)  $200 
D)  $1,450 
A)  $150 
B)  $800 
C)  $200 
D)  $1,450

Question 16

Assets are listed on the balance sheet in order of liquidity.Which of the following items reflects the normal order of liquidity?

Accepted Answer

A)  Cash, Inventory, Notes receivable, Accounts receivable 
B)  Notes Receivable, Inventory, Accounts receivable, Cash 
C)  Cash, Accounts receivable, Inventory, Notes receivable 
D)  Plant assets, Inventory, Notes receivable, Cash 
A)  Cash, Inventory, Notes receivable, Accounts receivable 
B)  Notes Receivable, Inventory, Accounts receivable, Cash 
C)  Cash, Accounts receivable, Inventory, Notes receivable 
D)  Plant assets, Inventory, Notes receivable, Cash

Question 17

The direct write-off method requires an entry with a credit to Accounts receivable to record the uncollectible accounts expense.

Accepted Answer

A) True 
 B)False

Question 18

The following information is from the 2013 records of Armadillo Camera Shop: $\begin{array}{|l|r|}
\hline\text { Accounts receivable, December 31,2013 } & \$ 20,000 \text { (debit) } \
\hline \text { Net credit sales for 2013 } & 95,000 \
\hline \text { Accounts written off as uncollectible during 2013 } & 7,000 \
\hline \text { Cash sales during 2013 } & 27,000 \
\hline
\end{array}$ Uncollectible accounts expense is determined by the direct write-off method.Which of the following will be the amount of Uncollectible accounts expense?

Accepted Answer

A)  $2,250 
B)  $3,450 
C)  $7,000 
D)  $2,850 
A)  $2,250 
B)  $3,450 
C)  $7,000 
D)  $2,850

Question 19

Which of the following are the two methods of accounting for uncollectible receivables?

Accepted Answer

A)  The direct write-off method and the liability method 
B)  The asset method and the sales method 
C)  The allowance method and the liability method 
D)  The allowance method and the direct write-off method 
A)  The direct write-off method and the liability method 
B)  The asset method and the sales method 
C)  The allowance method and the liability method 
D)  The allowance method and the direct write-off method

Question 20

Which of the following is the party lending funds on a note?

Accepted Answer

A)  The maker of the note 
B)  The drawer of the note 
C)  The principal of the note 
D)  The payee of the note 
A)  The maker of the note 
B)  The drawer of the note 
C)  The principal of the note 
D)  The payee of the note

Which of the following statements is TRUE?

The acid-test ratio is also known as the quick ratio.

The direct write-off method conforms to the matching principle better than the allowance method.

On December 1,2013,Parsons Sales sold machinery to a customer for $2,000.The customer could not pay at the time of sale,but agreed to pay 9 months later,and signed a 9-month note at 12% interest.Please provide the accrual entry needed at December 31,2013.

Which of the following is TRUE of days' sales in receivables?

Interest revenue must be reported for a note receivable that is outstanding at the end of the accounting period.

The Allowance for uncollectible accounts currently has a debit balance of $200.The company's management estimates that 2.5% of net credit sales will be uncollectible.Net credit sales are $115,000.What will be the amount of Uncollectible accounts expense reported on the income statement?

When a company is using the direct write-off method,and an account is written off,the journal entry consists of a:

Which of the following is NOT one of the benefits of a business accepting credit cards from their customers?

Which of the following entries would be used to account for uncollectible receivables using the direct write-off method?

The ratio that indicates how many days,on average,it takes to collect the receivables is known as the days' sales in receivables.

Assets are listed on the balance sheet in order of liquidity.Which of the following items reflects the normal order of liquidity?

The direct write-off method requires an entry with a credit to Accounts receivable to record the uncollectible accounts expense.

Which of the following are the two methods of accounting for uncollectible receivables?

Which of the following is the party lending funds on a note?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Internal Control and Cash

Plant Assets and Intangibles

Current Liabilities and Payroll

Long-Term Liabilities, bonds Payable, and Classification of Liabilities on the Balance Sheet

Filters

Exam 8: Receivables

Which of the following statements is TRUE?

The acid-test ratio is also known as the quick ratio.

The direct write-off method conforms to the matching principle better than the allowance method.

On December 1,2013,Parsons Sales sold machinery to a customer for $2,000.The customer could not pay at the time of sale,but agreed to pay 9 months later,and signed a 9-month note at 12% interest.Please provide the accrual entry needed at December 31,2013.

Which of the following is TRUE of days' sales in receivables?

Interest revenue must be reported for a note receivable that is outstanding at the end of the accounting period.

The Allowance for uncollectible accounts currently has a debit balance of $200.The company's management estimates that 2.5% of net credit sales will be uncollectible.Net credit sales are $115,000.What will be the amount of Uncollectible accounts expense reported on the income statement?

When a company is using the direct write-off method,and an account is written off,the journal entry consists of a:

Which of the following is NOT one of the benefits of a business accepting credit cards from their customers?

Which of the following entries would be used to account for uncollectible receivables using the direct write-off method?

The ratio that indicates how many days,on average,it takes to collect the receivables is known as the days' sales in receivables.

Assets are listed on the balance sheet in order of liquidity.Which of the following items reflects the normal order of liquidity?

The direct write-off method requires an entry with a credit to Accounts receivable to record the uncollectible accounts expense.

Which of the following are the two methods of accounting for uncollectible receivables?

Which of the following is the party lending funds on a note?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Internal Control and Cash

Plant Assets and Intangibles

Current Liabilities and Payroll

Long-Term Liabilities, bonds Payable, and Classification of Liabilities on the Balance Sheet

Filters