Question 1

On April 1, 2015, Banne Services has received a 6-month note for $10,000 at 8%. Calculate the amount of interest receivable on maturity.

Accepted Answer

A) $320 
B) $460 
C) $800 
D) $400 
A) $320 
B) $460 
C) $800 
D) $400

Question 2

On December 1, 2015, Parsons Inc. sold machinery to a customer for $20,000. The customer could not pay at the time of sale, but agreed to pay 9 months later, and signed a 9-month note at 9% interest. What was the total amount of cash collected by Parsons on the maturity of the note?

Accepted Answer

A) $21,800 
B) $21,350 
C) $18,650 
D) $21,200 
A) $21,800 
B) $21,350 
C) $18,650 
D) $21,200

Question 3

Accounts receivable are also known as trade receivables.

Accepted Answer

A) True 
 B)False

Question 4

On October 1, 2015, Android Inc. made a loan to one of its customers. The customer signed a 4-month note for $100,000 at 15%. How much interest revenue did the company record in the year 2016 for this note?

Accepted Answer

A) $2,150 
B) $3,750 
C) $1,250 
D) $5,000 
A) $2,150 
B) $3,750 
C) $1,250 
D) $5,000

Question 5

Smart Art is a new establishment. During the first year, there were credit sales of $40,000 and collections of credit sales of $36,000. One account for $650 was written off. The company decided to use the percent-of-sales method to account for bad debts expense, and decided to use a factor of 2% for their year-end adjustment of bad debts expense. At the end of the year, the balance of bad debts expense would be:

Accepted Answer

A) $150. 
B) $800. 
C) $250. 
D) $1,450. 
A) $150. 
B) $800. 
C) $250. 
D) $1,450.

Question 6

Martin Sales provides the following information: Net credit sales: $750,000
Beginning net accounts receivable: $40,000
Ending net accounts receivable: $20,000
Calculate the accounts receivable turnover ratio. (Round to the nearest whole number.)

Accepted Answer

A) 24 times 
B) 25 times 
C) 27 times 
D) 22 times 
A) 24 times 
B) 25 times 
C) 27 times 
D) 22 times

Question 7

What is the maturity value of a 3-month, 10% note for $40,000?

Accepted Answer

A) $42,000 
B) $44,000 
C) $41,000 
D) $40,000 
A) $42,000 
B) $44,000 
C) $41,000 
D) $40,000

Question 8

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

Accepted Answer

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

Question 9

The accounts receivable turnover ratio measures:

Accepted Answer

A) how well a company can pay its current liabilities with its current assets. 
B) how many days it takes, on average, to collect receivables. 
C) how many days it takes, on average, to sell the inventory. 
D) the times a company collects accounts receivable in a year. 
A) how well a company can pay its current liabilities with its current assets. 
B) how many days it takes, on average, to collect receivables. 
C) how many days it takes, on average, to sell the inventory. 
D) the times a company collects accounts receivable in a year.

Question 10

Sales through credit cards and debit cards are journalized in the same way as credit sales are journalized.

Accepted Answer

A) True 
 B)False

Question 11

A receivable can be described as a monetary claim against a business or an individual.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is an example of exercise of internal control over receivables?

Accepted Answer

A) separate cash collection and credit allowance duties 
B) extend credit only to customers who are most likely to pay 
C) pursue collection from customers to maximize cash flow 
D) ensure quick recovery of accounts receivable 
A) separate cash collection and credit allowance duties 
B) extend credit only to customers who are most likely to pay 
C) pursue collection from customers to maximize cash flow 
D) ensure quick recovery of accounts receivable

Question 13

At the beginning of 2015, Peter Dots has the following ledger balances:   During the year, credit sales amounted to $800,000. Cash collected on credit sales amounted to $760,000 and $18,000 has been written off. At the end of the year, company adjusted for bad debts expense using the aging method. The amount estimated as uncollectible was $25,000. The ending balance in Bad Debts Expense would be:

Accepted Answer

A) $38,000. 
B) $25,000. 
C) $13,000. 
D) $7,000. 
A) $38,000. 
B) $25,000. 
C) $13,000. 
D) $7,000.

Question 14

In order to exercise effective internal control over receivables the credit department must have access cash.

Accepted Answer

A) True 
 B)False

Question 15

At the beginning of 2015, Peter Dots has the following ledger balances:   During the year, credit sales amounted to $800,000. Cash collected on credit sales amounted to $760,000 and $18,000 has been written off. At the end of the year, company adjusted for bad debts expense using the aging method. The amount estimated as uncollectible was $25,000. The ending balance in the Allowance for Bad Debts would be:

Accepted Answer

A) $38.000. 
B) $18,000. 
C) $25,000. 
D) $30,000. 
A) $38.000. 
B) $18,000. 
C) $25,000. 
D) $30,000.

Question 16

GAAP requires most companies to use the:

Accepted Answer

A) direct write-off method to evaluate bad debts. 
B) allowance method to evaluate bad debts. 
C) amortization method to evaluate bad debts. 
D) 360-day method to evaluate bad debts. 
A) direct write-off method to evaluate bad debts. 
B) allowance method to evaluate bad debts. 
C) amortization method to evaluate bad debts. 
D) 360-day method to evaluate bad debts.

Question 17

Days' sales in receivables is also known as the collection period.

Accepted Answer

A) True 
 B)False

Question 18

The amount of Accounts Receivable is generally reported at its gross amount on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 19

The following information is from the 2015 records of Armand Camera Shop:   Bad debts expense is estimated by the aging-of-receivables method. Management estimates that $5,000 of accounts receivable will be uncollectible. Calculate the amount of bad debts expense for 2015.

Accepted Answer

A) $7,000 
B) $6,500 
C) $6,450 
D) $5,250 
A) $7,000 
B) $6,500 
C) $6,450 
D) $5,250

Question 20

Which of the following is included in the category of other receivables?

Accepted Answer

A) interest receivable 
B) accounts receivable 
C) notes receivable 
D) investments 
A) interest receivable 
B) accounts receivable 
C) notes receivable 
D) investments

Exam 9: Receivables

On April 1, 2015, Banne Services has received a 6-month note for $10,000 at 8%. Calculate the amount of interest receivable on maturity.

On December 1, 2015, Parsons Inc. sold machinery to a customer for $20,000. The customer could not pay at the time of sale, but agreed to pay 9 months later, and signed a 9-month note at 9% interest. What was the total amount of cash collected by Parsons on the maturity of the note?

Accounts receivable are also known as trade receivables.

On October 1, 2015, Android Inc. made a loan to one of its customers. The customer signed a 4-month note for $100,000 at 15%. How much interest revenue did the company record in the year 2016 for this note?

Martin Sales provides the following information: Net credit sales: $750,000 Beginning net accounts receivable: $40,000 Ending net accounts receivable: $20,000 Calculate the accounts receivable turnover ratio. (Round to the nearest whole number.)

What is the maturity value of a 3-month, 10% note for $40,000?

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

The accounts receivable turnover ratio measures:

Sales through credit cards and debit cards are journalized in the same way as credit sales are journalized.

A receivable can be described as a monetary claim against a business or an individual.

Which of the following is an example of exercise of internal control over receivables?

In order to exercise effective internal control over receivables the credit department must have access cash.

GAAP requires most companies to use the:

Days' sales in receivables is also known as the collection period.

The amount of Accounts Receivable is generally reported at its gross amount on the balance sheet.

The following information is from the 2015 records of Armand Camera Shop: Bad debts expense is estimated by the aging-of-receivables method. Management estimates that $5,000 of accounts receivable will be uncollectible. Calculate the amount of bad debts expense for 2015.

Which of the following is included in the category of other receivables?

Accounting and the Business Environment

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Introduction to Managerial Accounting

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