Question 1

What is the effect on the accounting equation of writing off an uncollectible account of $75?

Accepted Answer

A) increase assets $75 and decrease liabilities $75 
B) decrease assets $75 and decrease liabilities $75 
C) decrease assets $75 and increase expense $75 
D) no net effect on total assets 
A) increase assets $75 and decrease liabilities $75 
B) decrease assets $75 and decrease liabilities $75 
C) decrease assets $75 and increase expense $75 
D) no net effect on total assets

Question 2

Bad debts on the income statement will always equal the balance in the allowance for uncollectible accounts on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 3

Bad debts expense decreases total assets.

Accepted Answer

A) True 
 B)False

Question 4

Y Company obtained the following balances from its computerized accounting information system at the end of the year before adjustments:   The company estimates that 2% of net sales will be uncollectible.After the correct adjusting entry has been made,what is the Net accounts receivable on the year-end balance sheet?

Accepted Answer

A) This is a trick question.Accounts receivable appear on the income statement,not the balance sheet. 
B) $24,000 
C) $22,000 
D) $27,000 
A) This is a trick question.Accounts receivable appear on the income statement,not the balance sheet. 
B) $24,000 
C) $22,000 
D) $27,000

Question 5

X Company used the following items to complete its bank reconciliation for the month of October: ∙ Deposits in transit were $2,500.
∙ Outstanding checks totaled $1,100.
∙ Bank service charges were $10.
∙ The company correctly wrote a check for $192,but mistakenly recorded the check as $129 on its books.The bank cashed the check correctly for $192.
∙ A customer's check for $50 was returned by the bank,NSF.
How should the customer's check for $50 that was returned by the bank,NSF,be treated?

Accepted Answer

A) added to the balance per bank statement 
B) deducted from the balance per bank statement 
C) added to the balance per books 
D) deducted from the balance per books 
A) added to the balance per bank statement 
B) deducted from the balance per bank statement 
C) added to the balance per books 
D) deducted from the balance per books

Question 6

Match between columns
                        Premises: Amounts owed by customers on account
Checks deposited in a bank account that have "bounced" due to insufficient funds
Checks a company has written that haven’t cleared the bank
Method used when bad debts expense is recorded only after the specific customer’s account is identified as uncollectible
An account that is subtracted from a related asset account
Credit sales made to customers who pay for the sale with a credit card issued by a bank or financial institution
The amount of accounts receivable a company actually expects to collect in cash
The expense related to the cost of extending credit to customers who don’t pay
A contra account to accounts receivable, which shows the amount of money, considered to

Accepted Answer

The Answer of Contra-asset account and Net receivables and Outstanding is...

Question 7

The interest revenue from a 6%,2-year note receivable will not be recorded until the year the interest is collected.

Accepted Answer

A) True 
 B)False

Question 8

A common item on the bank reconciliation is ________.

Accepted Answer

A) outstanding checks,which are added to the balance per bank statement 
B) outstanding checks,which are added to the balance per books 
C) deposits in transit,which are added to the balance per bank statement 
D) deposits in transit,which are added to the balance per books 
A) outstanding checks,which are added to the balance per bank statement 
B) outstanding checks,which are added to the balance per books 
C) deposits in transit,which are added to the balance per bank statement 
D) deposits in transit,which are added to the balance per books

Question 9

Corporations use the allowance method because it is required by GAAP.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is FALSE?

Accepted Answer

A) The allowance method is a GAAP method. 
B) The direct write-off method violates the matching principle. 
C) Under the direct write-off method,accounts are expensed when they are identified as uncollectible. 
D) Under the allowance method,amounts written off are recorded as bad debts expense. 
A) The allowance method is a GAAP method. 
B) The direct write-off method violates the matching principle. 
C) Under the direct write-off method,accounts are expensed when they are identified as uncollectible. 
D) Under the allowance method,amounts written off are recorded as bad debts expense.

Question 11

A company has an allowance for uncollectible accounts of $1,000,a positive number,at the end of the year,before the adjusting entry is made to record this year's bad debts expense.The allowance account has a positive balance because ________.

Accepted Answer

A) the allowance always has a positive balance 
B) the allowance created at the end of last year was too small to cover all of the accounts written off this year 
C) the allowance created at the end of last year was larger than the total of all of the accounts written off this year 
D) the balance in the allowance must always equal bad debts expense for the year. 
A) the allowance always has a positive balance 
B) the allowance created at the end of last year was too small to cover all of the accounts written off this year 
C) the allowance created at the end of last year was larger than the total of all of the accounts written off this year 
D) the balance in the allowance must always equal bad debts expense for the year.

Question 12

Segregation of duties means that ________.

Accepted Answer

A) the person who has the physical custody of cash is the same person who does the record-keeping for cash 
B) the person who makes the daily bank deposit should be the same person who does the record keeping for cash 
C) the cashier should not have the key to the records tape inside the cash register 
D) access to the computerized accounting system should be controlled by passwords that are changed regularly 
A) the person who has the physical custody of cash is the same person who does the record-keeping for cash 
B) the person who makes the daily bank deposit should be the same person who does the record keeping for cash 
C) the cashier should not have the key to the records tape inside the cash register 
D) access to the computerized accounting system should be controlled by passwords that are changed regularly

Question 13

Gnu Company began business January 1,2011.The company has a liberal credit policy and has been experiencing a high rate of uncollectible accounts.Due to the significance of this amount,the company uses the allowance method for accounting for bad debts.During 2011,credit sales were $400,000.The year-end accounts receivable balance was $170,000.
Part A: Assume that the company uses the sales method and estimates that 5% of credit sales will become bad debts.Select the column which represents the financial statement where the item will appear,and fill in the correct dollar amount:
   Part B: Now assume that the company uses the accounts receivable method and estimates that 10% of accounts receivable will be uncollectible.Select the column which represents the financial statement where the item will appear,and fill in the correct dollar amount:

Accepted Answer

Part A:
 @#IMG-DLM&_

Question 14

Team Shirts had average net accounts receivable of $1,450 and credit sales of $36,250.Calculate the accounts receivable turnover for the period.

Accepted Answer

$36,250/$1

Question 15

On July 31,the accountant for Team Shirts was reviewing items related to accounts receivable.The following information was gathered for July:
a.The beginning balance in the Allowance for uncollectible accounts was $(600).
b.An account receivable owed by a customer in England for $250 U.S.dollars was determined to be uncollectible.
c.Credit sales for July were $12,000.The accountant for Team Shirts estimated that 4% of the sales would eventually be uncollectible.
What is the amount of bad debts expense for July? What will be the ending balance in the Allowance for uncollectible accounts?

Accepted Answer

Bad debts expense = $480 (=$12

What is the effect on the accounting equation of writing off an uncollectible account of $75?

Bad debts on the income statement will always equal the balance in the allowance for uncollectible accounts on the balance sheet.

Bad debts expense decreases total assets.

The interest revenue from a 6%,2-year note receivable will not be recorded until the year the interest is collected.

A common item on the bank reconciliation is ________.

Corporations use the allowance method because it is required by GAAP.

Which of the following statements is FALSE?

A company has an allowance for uncollectible accounts of $1,000,a positive number,at the end of the year,before the adjusting entry is made to record this year's bad debts expense.The allowance account has a positive balance because ________.

Segregation of duties means that ________.

Team Shirts had average net accounts receivable of $1,450 and credit sales of $36,250.Calculate the accounts receivable turnover for the period.

Business: Whats It All About

Qualities of Accounting Information

Accruals and Deferrals: Timing Is Everything in Accounting

The Purchase and Sale of Inventory

Acquisition and Use of Long-Term Assets

Accounting for Liabilities

Accounting for Shareholders Equity

Preparing and Analyzing the Statement of Cash Flows

Using Financial Statement Analysis to Evaluate Firm Performance

Quality of Earnings, corporate Governance, and Ifrs

Filters

Exam 4: Payment for Goods and Services: Cash and Accounts Receivable

What is the effect on the accounting equation of writing off an uncollectible account of $75?

Bad debts on the income statement will always equal the balance in the allowance for uncollectible accounts on the balance sheet.

Bad debts expense decreases total assets.

The interest revenue from a 6%,2-year note receivable will not be recorded until the year the interest is collected.

A common item on the bank reconciliation is ________.

Corporations use the allowance method because it is required by GAAP.

Which of the following statements is FALSE?

A company has an allowance for uncollectible accounts of $1,000,a positive number,at the end of the year,before the adjusting entry is made to record this year's bad debts expense.The allowance account has a positive balance because ________.

Segregation of duties means that ________.

Team Shirts had average net accounts receivable of $1,450 and credit sales of $36,250.Calculate the accounts receivable turnover for the period.

Business: Whats It All About

Qualities of Accounting Information

Accruals and Deferrals: Timing Is Everything in Accounting

The Purchase and Sale of Inventory

Acquisition and Use of Long-Term Assets

Accounting for Liabilities

Accounting for Shareholders Equity

Preparing and Analyzing the Statement of Cash Flows

Using Financial Statement Analysis to Evaluate Firm Performance

Quality of Earnings, corporate Governance, and Ifrs

Filters