Question 1

When an account receivable is written off under the direct write-off method, the accounting equation is kept in balance because

Accepted Answer

A)  assets and equity both decrease by the same amount. 
B)  assets both increase and decrease by the same amount. 
C)  assets and equity both increase by the same amount. 
D)  equity both increases and decreases by the same amount. 
A)  assets and equity both decrease by the same amount. 
B)  assets both increase and decrease by the same amount. 
C)  assets and equity both increase by the same amount. 
D)  equity both increases and decreases by the same amount. A

Question 2

Jefferson uses the percent of sales method of estimating uncollectible expenses. Based on past history, 2% of credit sales are expected to be uncollectible. Sales for the current year are $5,550,000. Which of the following is correct?

Accepted Answer

A)  Uncollectible accounts are estimated to be $55,500. 
B)  Uncollectible accounts are estimated to be $111,000. 
C)  Bad debt expense is estimated to be $5,550. 
D)  Bad debt expense is estimated to be $11,100. 
A)  Uncollectible accounts are estimated to be $55,500. 
B)  Uncollectible accounts are estimated to be $111,000. 
C)  Bad debt expense is estimated to be $5,550. 
D)  Bad debt expense is estimated to be $11,100. B

Question 3

A $6,000, 60-day, 12% note recorded on November 21 is not paid by the maker at maturity. The journal entry to recognize this event is

Accepted Answer

A)  debit Cash, $6,120; credit Notes Receivable, $6,120 
B)  debit Notes Receivable, $6,120; credit Accounts Receivable, $6,000; credit Interest Receivable, $120 
C)  debit Notes Receivable, $6,060; credit Accounts Receivable, $6,060 
D)  debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; credit Interest Revenue, $120 
A)  debit Cash, $6,120; credit Notes Receivable, $6,120 
B)  debit Notes Receivable, $6,120; credit Accounts Receivable, $6,000; credit Interest Receivable, $120 
C)  debit Notes Receivable, $6,060; credit Accounts Receivable, $6,060 
D)  debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; credit Interest Revenue, $120 D

Question 4

When the allowance method for accounting for uncollectible receivables is used, net income is reduced when a specific receivable is written off.

Accepted Answer

A) True 
 B)False

Question 5

A primary difference between the direct write-off and allowance method is whether or not bad debts is based on a percentage of sales.

Accepted Answer

A) True 
 B)False

Question 6

Determine the due date and the amount of interest due at maturity on the following notes:
​

Accepted Answer

The answer of Determine the due date and the amount...

Question 7

Under the direct write-off method of uncollectible accounts, what is the effect on the accounting equation of writing off a customer's account?

Accepted Answer

Assets decrease and

Question 8

The difference between the balance in Accounts Receivable and the balance in the Allowance for Doubtful Accounts is called the net realizable value of the receivables.

Accepted Answer

A) True 
 B)False

Question 9

The journal entry to record a note received from a customer to replace an account is

Accepted Answer

A)  debit Notes Receivable; credit Accounts Receivable 
B)  debit Accounts Receivable; credit Notes Receivable 
C)  debit Cash; credit Notes Receivable 
D)  debit Notes Receivable; credit Notes Payable 
A)  debit Notes Receivable; credit Accounts Receivable 
B)  debit Accounts Receivable; credit Notes Receivable 
C)  debit Cash; credit Notes Receivable 
D)  debit Notes Receivable; credit Notes Payable

Question 10

A company uses the allowance method to account for uncollectible accounts receivable. When the firm writes off a specific customer's account receivable

Accepted Answer

A)  total current assets are reduced 
B)  total expenses for the period are increased 
C)  net realizable value of accounts receivable increases 
D)  there is no effect on total current assets or total expenses 
A)  total current assets are reduced 
B)  total expenses for the period are increased 
C)  net realizable value of accounts receivable increases 
D)  there is no effect on total current assets or total expenses

Question 11

The receivable that is usually evidenced by a formal, written instrument of credit is a(n)

Accepted Answer

A)  trade receivable 
B)  note receivable 
C)  accounts receivable 
D)  income tax receivable 
A)  trade receivable 
B)  note receivable 
C)  accounts receivable 
D)  income tax receivable

Question 12

The maturity value of a $40,000, 9%, 40-day note receivable dated July 3 is

Accepted Answer

A)  $40,000 
B)  $40,400 
C)  $43,600 
D)  $44,000 
A)  $40,000 
B)  $40,400 
C)  $43,600 
D)  $44,000

Question 13

Indications that an account may be uncollectible include all of the following except

Accepted Answer

A)  the customer closes its business 
B)  the customer is making small but regular payments 
C)  the customer files for bankruptcy 
D)  the customer cannot be located 
A)  the customer closes its business 
B)  the customer is making small but regular payments 
C)  the customer files for bankruptcy 
D)  the customer cannot be located

Question 14

Which of the following receivables would not be classified as an "other receivable"?

Accepted Answer

A)  advance to an employee 
B)  interest receivable 
C)  refundable income tax 
D)  notes receivable 
A)  advance to an employee 
B)  interest receivable 
C)  refundable income tax 
D)  notes receivable

Question 15

At the end of the current year, Accounts Receivable has a balance of $550,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and sales for the year total $2,500,000. An analysis of receivables estimates uncollectible receivables as $25,000.  
Determine the net realizable value of accounts receivable after adjustment. (Hint: Determine the amount of the adjusting entry for bad debt expense and the adjusted balance of Allowance for Doubtful Accounts.)

Accepted Answer

A)  $550,000 
B)  $544,500 
C)  $525,000 
D)  $575,000 
A)  $550,000 
B)  $544,500 
C)  $525,000 
D)  $575,000

Question 16

Under the allowance method, when a year-end adjustment is made for estimated uncollectible accounts

Accepted Answer

A)  liabilities decrease 
B)  net income is unchanged 
C)  total assets are unchanged 
D)  total assets decrease 
A)  liabilities decrease 
B)  net income is unchanged 
C)  total assets are unchanged 
D)  total assets decrease

Question 17

Selling receivables is called

Accepted Answer

A)  factoring 
B)  sales revenue 
C)  a factor 
D)  sold receivables 
A)  factoring 
B)  sales revenue 
C)  a factor 
D)  sold receivables

Question 18

The direct write-off method records bad debt expense in the year the specific account receivable is determined to be uncollectible.

Accepted Answer

A) True 
 B)False

Question 19

The direct write-off method of accounting for uncollectible accounts

Accepted Answer

A)  emphasizes balance sheet relationships 
B)  is often used by small companies and companies with few receivables 
C)  emphasizes cash realizable value 
D)  emphasizes the matching of expenses with revenues 
A)  emphasizes balance sheet relationships 
B)  is often used by small companies and companies with few receivables 
C)  emphasizes cash realizable value 
D)  emphasizes the matching of expenses with revenues

Question 20

Fill in the blanks related to the characteristics of a promissory note.
1.The party promising to pay the note is called the ________.
2.The amount for which the note is written is called the _______ amount.
3.The date the note is to be paid is the _______ date.
4.The time between the date when a note is written and the time it must be paid is called the _____ of the note.

Accepted Answer

1. maker
2

When an account receivable is written off under the direct write-off method, the accounting equation is kept in balance because

Jefferson uses the percent of sales method of estimating uncollectible expenses. Based on past history, 2% of credit sales are expected to be uncollectible. Sales for the current year are $5,550,000. Which of the following is correct?

A $6,000, 60-day, 12% note recorded on November 21 is not paid by the maker at maturity. The journal entry to recognize this event is

When the allowance method for accounting for uncollectible receivables is used, net income is reduced when a specific receivable is written off.

A primary difference between the direct write-off and allowance method is whether or not bad debts is based on a percentage of sales.

Determine the due date and the amount of interest due at maturity on the following notes:

Under the direct write-off method of uncollectible accounts, what is the effect on the accounting equation of writing off a customer's account?

The difference between the balance in Accounts Receivable and the balance in the Allowance for Doubtful Accounts is called the net realizable value of the receivables.

The journal entry to record a note received from a customer to replace an account is

A company uses the allowance method to account for uncollectible accounts receivable. When the firm writes off a specific customer's account receivable

The receivable that is usually evidenced by a formal, written instrument of credit is a(n)

The maturity value of a $40,000, 9%, 40-day note receivable dated July 3 is

Indications that an account may be uncollectible include all of the following except

Which of the following receivables would not be classified as an "other receivable"?

Under the allowance method, when a year-end adjustment is made for estimated uncollectible accounts

Selling receivables is called

The direct write-off method records bad debt expense in the year the specific account receivable is determined to be uncollectible.

The direct write-off method of accounting for uncollectible accounts

Accounting and Business

Double-Entry Accounting

Adjustments: Accruals and Deferrals

The Accounting Cycle

Accounting for Retail Businesses

Inventories

Internal Control and Cash

Long-Term Assets: Fixed and Intangible

Liabilities: Current, Installment Notes, and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, Stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Investments

Filters

Exam 8: Receivables

When an account receivable is written off under the direct write-off method, the accounting equation is kept in balance because

Jefferson uses the percent of sales method of estimating uncollectible expenses. Based on past history, 2% of credit sales are expected to be uncollectible. Sales for the current year are $5,550,000. Which of the following is correct?

A $6,000, 60-day, 12% note recorded on November 21 is not paid by the maker at maturity. The journal entry to recognize this event is

When the allowance method for accounting for uncollectible receivables is used, net income is reduced when a specific receivable is written off.

A primary difference between the direct write-off and allowance method is whether or not bad debts is based on a percentage of sales.

Determine the due date and the amount of interest due at maturity on the following notes: ​

Under the direct write-off method of uncollectible accounts, what is the effect on the accounting equation of writing off a customer's account?

The difference between the balance in Accounts Receivable and the balance in the Allowance for Doubtful Accounts is called the net realizable value of the receivables.

The journal entry to record a note received from a customer to replace an account is

A company uses the allowance method to account for uncollectible accounts receivable. When the firm writes off a specific customer's account receivable

The receivable that is usually evidenced by a formal, written instrument of credit is a(n)

The maturity value of a $40,000, 9%, 40-day note receivable dated July 3 is

Indications that an account may be uncollectible include all of the following except

Which of the following receivables would not be classified as an "other receivable"?

Under the allowance method, when a year-end adjustment is made for estimated uncollectible accounts

Selling receivables is called

The direct write-off method records bad debt expense in the year the specific account receivable is determined to be uncollectible.

The direct write-off method of accounting for uncollectible accounts

Accounting and Business

Double-Entry Accounting

Adjustments: Accruals and Deferrals

The Accounting Cycle

Accounting for Retail Businesses

Inventories

Internal Control and Cash

Long-Term Assets: Fixed and Intangible

Liabilities: Current, Installment Notes, and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, Stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Investments

Filters

Determine the due date and the amount of interest due at maturity on the following notes: