Question 1

The maker of a note recognizes a note payable on the balance sheet and interest expense on its income statement.

Accepted Answer

A) True 
 B)False

Question 2

The following data concern Wang Corporation for 2017: ?
$$\begin{array} { l r } 
\text { Credit sales during the year } & \$ 1,600,000 \
\text { Accounts receivable-December } 31,2017 & 235,000 \
\text { Allowance for doubtful accounts-December 31,2017 } & 18,000 \
\text { Bad debts expense for the year } & 11,000
\end{array}$$ What amount will Wang show on its year-end balance sheet for the net realizable value of its accounts receivable?

Accepted Answer

A) $253,000 
B) $235,000 
C) $224,000 
D) $217,000 
A) $253,000 
B) $235,000 
C) $224,000 
D) $217,000

Question 3

Cheswick Corp.
The following information is for Cheswick Corp. at the end of 2017:
$\begin{array} { l r } 
\text { Sales } & \$ 800,000 \
\text { Sales returns and allowances } & 8,000 \
\text { Accounts receivable-December 31, 2017 } & 175,000 \
\text { Allowance for doubtful accounts-December 31, 2017 } & \
\quad \text { (Credit balance) (before adjustment for bad debts) } & 1,000 \
\text { Estimated uncollectible accounts } & \
\quad \text { (Per aging schedule at December 31, 2017) } & 7,500
\end{array}$
-Refer to the data for Cheswick Corp..
Determine the effect on Cheswick Corp.' accounting equation of the year-end adjustment of bad debts using the aging approach.

Accepted Answer

The answer of Cheswick Corp.
The following information is for Cheswick...

Question 4

Bad Debts Expense is increased and Accounts Receivable is decreased at the end of the period to recognize bad debts under the allowance method.

Accepted Answer

A) True 
 B)False

Question 5

Typically,the lower the accounts receivable turnover ratio,the better.

Accepted Answer

A) True 
 B)False

Question 6

The comparative balance sheets of Midnite Corp.for 2018 and 2017 indicate that short-term trade notes receivable increased from $5,000 in 2016 to $75,000 in 2018.How will this change be reported on Midnite's statement of cash flows,if Midnite uses the indirect method?

Accepted Answer

A) It will be included in the amount of cash and cash equivalents at the end of 2018. 
B) It will be reported as a deduction from net income in the Operating Activities section. 
C) It will be reported as a cash outflow in the Investing Activities section. 
D) It will be added to net income in the Operating Activities section. 
A) It will be included in the amount of cash and cash equivalents at the end of 2018. 
B) It will be reported as a deduction from net income in the Operating Activities section. 
C) It will be reported as a cash outflow in the Investing Activities section. 
D) It will be added to net income in the Operating Activities section.

Question 7

Bonds issued by corporations or governmental bodies as a form of borrowing are called __________.

Accepted Answer

The answer of Bonds issued by corporations or governmental bodies...

Question 8

Utah Co.sold merchandise to Big Sky Corp.on December 1,2017,for $9,000 and accepted a promissory note for payment in the same amount.The note has a term of 90 days and a stated interest rate of 8%.Utah's accounting period ends on December 31.What amount should Utah recognize as interest revenue on December 31,2017 (if a 360-day year is assumed)?

Accepted Answer

A) $0 
B) $60 
C) $120 
D) $180 
A) $0 
B) $60 
C) $120 
D) $180

Question 9

A company that holds a promissory note from another company has an asset called a(n)__________.

Accepted Answer

The answer of A company that holds a promissory note...

Question 10

Which one of the following is not an accurate description of Allowance for Doubtful Accounts?

Accepted Answer

A) Contra account 
B) Balance sheet account 
C) Income statement account 
D) Current asset account 
A) Contra account 
B) Balance sheet account 
C) Income statement account 
D) Current asset account

Question 11

The gross accounts receivable less the allowance for doubtful accounts is known as the __________.

Accepted Answer

net realiz

Question 12

A decrease in accounts receivable represents an increase in a company's cash flow from operating activities.

Accepted Answer

A) True 
 B)False

Question 13

The date that a promissory note is due is the __________.

Accepted Answer

The answer of The date that a promissory note is...

Question 14

The 2017 annual report of Ski Products,Inc.reported the following amounts (in millions of dollars):
Required
1.Compute Ski's accounts receivable turnover ratio for the year ended May 31,2017.(Assume that all sales are on credit. )
2.What is the average collection period in days for an account receivable? Explain your answer.
3.Ski's main products are medium to high-end skis and snow boards.Give some examples of the types of customers you would expect Ski to have.Do you think the average collection period for sales to these customers is reasonable? What other information do you need to fully answer that question?
 $\begin{array}{llr}
  \text { Net sales, for the year ended May 31,2017 } &\$15,111.2\
 \text { Receivables, May 31, 2017 } &989.4\
 \text {Receivables, May 31, 2016  } &1,011.6
\end{array}$

Accepted Answer

1.
 
 \[\begin{array} { l } 
  \text {Ac

Question 15

The percentage of net credit sales approach for recognizing bad debts considers any existing balance in Allowance for Doubtful Accounts.

Accepted Answer

A) True 
 B)False

Question 16

How will the payee of the promissory note record the note on its books?

Accepted Answer

A) The promissory note will be recorded as an asset. 
B) The promissory note will be recorded as a liability. 
C) The promissory note will be recorded as revenue. 
D) The promissory note will be recorded as an expense. 
A) The promissory note will be recorded as an asset. 
B) The promissory note will be recorded as a liability. 
C) The promissory note will be recorded as revenue. 
D) The promissory note will be recorded as an expense.

Question 17

Which one of the following is an accurate description of Allowance for Doubtful Accounts?

Accepted Answer

A) Contra account 
B) Liability account 
C) Revenue account 
D) Expense account 
A) Contra account 
B) Liability account 
C) Revenue account 
D) Expense account

Question 18

Speed Wear Bicycle Gear accepts VISA credit cards from its customers.Speed Wear is closed on Sundays and on that day records the weekly sales and remits the credit card drafts to VISA.For the week ending on Sunday,April 12,cash sales totaled $3,650,and credit card sales amounted to $3,900.On April 15,Speed Wear received $3,794.70 from VISA as payment for the credit card drafts.Analyze the necessary adjustments on April 12 and 15.As a percentage,what collection fee is VISA charging Speed Wear?

Accepted Answer

None

Question 19

On January 1,2017,Accounts Receivable and Allowance for Uncollectible Accounts for Darius Company carried balances of $20,000 and $550,respectively.During the year,the company reported $70,000 of credit sales.There were $400 of receivables written off as uncollectible in 2017.Cash collections of receivables amounted to $74,700.The company estimates that it will be unable to collect 5% of the year-end accounts receivable balance. ​
The amount of bad debts expense recognized in the 2017 income statement will be:

Accepted Answer

A) $545. 
B) $595. 
C) $745. 
D) $795. 
A) $545. 
B) $595. 
C) $745. 
D) $795.

Question 20

When a note is discounted at a bank,it is normally done with recourse.

Accepted Answer

A) True 
 B)False

The maker of a note recognizes a note payable on the balance sheet and interest expense on its income statement.

Bad Debts Expense is increased and Accounts Receivable is decreased at the end of the period to recognize bad debts under the allowance method.

Typically,the lower the accounts receivable turnover ratio,the better.

The comparative balance sheets of Midnite Corp.for 2018 and 2017 indicate that short-term trade notes receivable increased from $5,000 in 2016 to $75,000 in 2018.How will this change be reported on Midnite's statement of cash flows,if Midnite uses the indirect method?

Bonds issued by corporations or governmental bodies as a form of borrowing are called __________.

A company that holds a promissory note from another company has an asset called a(n)__________.

Which one of the following is not an accurate description of Allowance for Doubtful Accounts?

The gross accounts receivable less the allowance for doubtful accounts is known as the __________.

A decrease in accounts receivable represents an increase in a company's cash flow from operating activities.

The date that a promissory note is due is the __________.

The percentage of net credit sales approach for recognizing bad debts considers any existing balance in Allowance for Doubtful Accounts.

How will the payee of the promissory note record the note on its books?

Which one of the following is an accurate description of Allowance for Doubtful Accounts?

When a note is discounted at a bank,it is normally done with recourse.

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters

Exam 7: Receivables and Investments

The maker of a note recognizes a note payable on the balance sheet and interest expense on its income statement.

Bad Debts Expense is increased and Accounts Receivable is decreased at the end of the period to recognize bad debts under the allowance method.

Typically,the lower the accounts receivable turnover ratio,the better.

The comparative balance sheets of Midnite Corp.for 2018 and 2017 indicate that short-term trade notes receivable increased from $5,000 in 2016 to $75,000 in 2018.How will this change be reported on Midnite's statement of cash flows,if Midnite uses the indirect method?

Bonds issued by corporations or governmental bodies as a form of borrowing are called __________.

A company that holds a promissory note from another company has an asset called a(n)__________.

Which one of the following is not an accurate description of Allowance for Doubtful Accounts?

The gross accounts receivable less the allowance for doubtful accounts is known as the __________.

A decrease in accounts receivable represents an increase in a company's cash flow from operating activities.

The date that a promissory note is due is the __________.

The percentage of net credit sales approach for recognizing bad debts considers any existing balance in Allowance for Doubtful Accounts.

How will the payee of the promissory note record the note on its books?

Which one of the following is an accurate description of Allowance for Doubtful Accounts?

When a note is discounted at a bank,it is normally done with recourse.

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters