Question 1

The contra-asset account used to reduce accounts receivable to its net realizable value is __________.

Accepted Answer

Allowance

Question 2

What can a company try to improve its accounts receivable turnover ratio?

Accepted Answer

A) Lower its selling prices 
B) Increase its sales force 
C) Give customers credit terms of 2/10,n/30 rather than 1/10,n/30 
D) Reduce the number of employees working in the credit department 
A) Lower its selling prices 
B) Increase its sales force 
C) Give customers credit terms of 2/10,n/30 rather than 1/10,n/30 
D) Reduce the number of employees working in the credit department

Question 3

One of the problems with the use of the allowance method to account for bad debts is that it often violates the matching principle.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is true regarding the two allowance methods used to account for bad debts?

Accepted Answer

A) The percentage of net credit sales approach takes into account the existing balance in the Allowance for Doubtful Accounts account. 
B) The direct write-off method takes into account the existing balance in the Allowance for Doubtful Accounts account. 
C) The percentage of accounts receivable approach takes into account the existing balance in the Allowance for Doubtful Accounts account. 
D) The direct write-off method does a better job of matching revenues and expenses. 
A) The percentage of net credit sales approach takes into account the existing balance in the Allowance for Doubtful Accounts account. 
B) The direct write-off method takes into account the existing balance in the Allowance for Doubtful Accounts account. 
C) The percentage of accounts receivable approach takes into account the existing balance in the Allowance for Doubtful Accounts account. 
D) The direct write-off method does a better job of matching revenues and expenses.

Question 5

When a company discounts a promissory note at the bank,it receives cash at the same time it would if it held the note to maturity.

Accepted Answer

A) True 
 B)False

Question 6

What is the purpose of an aging schedule?

Accepted Answer

An aging schedule categorizes the variou

Question 7

Which one of the approaches for the allowance method of accounting for bad debts emphasizes matching bad debts expense with revenue on the income statement?

Accepted Answer

A) The percentage of accounts receivable approach 
B) The percentage of net credit sales approach 
C) The direct write-off method 
D) The uncollectible approach 
A) The percentage of accounts receivable approach 
B) The percentage of net credit sales approach 
C) The direct write-off method 
D) The uncollectible approach

Question 8

The process of assigning a note due in the future to a bank before its maturity date is called __________.

Accepted Answer

The answer of The process of assigning a note due...

Question 9

Textbooks.com accepts VISA for payments of purchases made by students.The credit card drafts are deposited directly in a bank account.VISA charges a 2% collection fee.Credit card drafts totaling $12,000 are deposited during September.The effect of recording the sales and deposits will include an

Accepted Answer

A) increase in Cash for $12,000. 
B) increase to Sales for $11,760. 
C) increase to Accounts Receivable for $11,760. 
D) increase in Collection Fee Expense for $240. 
A) increase in Cash for $12,000. 
B) increase to Sales for $11,760. 
C) increase to Accounts Receivable for $11,760. 
D) increase in Collection Fee Expense for $240.

Question 10

When using the indirect cash flow method,a decrease in accounts receivable must be __________ to net income to arrive at the increase or decrease in cash flows.

Accepted Answer

The answer of When using the indirect cash flow method,a...

Question 11

Comfort Shoes received a promissory note from a customer on April 1,2017.The face amount of the note is $2,000;the terms are 12 months and 8% annual interest.How much total interest revenue will Comfort Shoes recognize for the year ended December 31,2017?

Accepted Answer

A) $40 
B) $107 
C) $120 
D) $160 
A) $40 
B) $107 
C) $120 
D) $160

Question 12

Securities issued by corporations as a form of ownership in the business,such as common or preferred stock,are called __________.

Accepted Answer

The answer of Securities issued by corporations as a form...

Question 13

If a company uses the direct write-off method of accounting for bad debts,

Accepted Answer

A) it is applying the matching principle. 
B) it will record bad debts expense only when an account is determined to be uncollectible. 
C) it will reduce the Accounts Receivable account at the end of the accounting period for estimated uncollectible accounts. 
D) it will report accounts receivable on the balance sheet at their net realizable value. 
A) it is applying the matching principle. 
B) it will record bad debts expense only when an account is determined to be uncollectible. 
C) it will reduce the Accounts Receivable account at the end of the accounting period for estimated uncollectible accounts. 
D) it will report accounts receivable on the balance sheet at their net realizable value.

Question 14

Evanston Inc.started the year with $35,000 in accounts receivable and ended the year with $50,000 in the account.Describe how information regarding the company's accounts receivable should be reflected on its statement of cash flows,assuming use of the indirect method.

Accepted Answer

The increase of $50,000 - $35,000,or $15

Question 15

Which one of the following statements is true?

Accepted Answer

A) When a company uses a subsidiary ledger,the balance in the control account,Accounts Receivable,shows only the amount the company expects to collect from the accounts receivable,net of any expected uncollectible accounts. 
B) An accounts receivable subsidiary ledger represents amounts due to vendors and suppliers. 
C) The balance in the control account,Accounts Receivable,should be equal to the sum of the balances in the subsidiary ledger for accounts receivable. 
D) A subsidiary ledger takes the place of the control account for some companies. 
A) When a company uses a subsidiary ledger,the balance in the control account,Accounts Receivable,shows only the amount the company expects to collect from the accounts receivable,net of any expected uncollectible accounts. 
B) An accounts receivable subsidiary ledger represents amounts due to vendors and suppliers. 
C) The balance in the control account,Accounts Receivable,should be equal to the sum of the balances in the subsidiary ledger for accounts receivable. 
D) A subsidiary ledger takes the place of the control account for some companies.

Question 16

Earl's Company reported its accounts receivable turnover ratio at 10 times.Its credit terms are 2/10,n/20.What does this ratio tell you about Earl's Company?

Accepted Answer

At an accounts receivable turnover of 10

Question 17

The equity method of accounting for an investment is used when a company purchases

Accepted Answer

A) more than 20% of the debt securities of a second company. 
B) 100% of the debt securities of a second company. 
C) 15% of the equity securities of a second company. 
D) more than 20% of the equity securities of a second company. 
A) more than 20% of the debt securities of a second company. 
B) 100% of the debt securities of a second company. 
C) 15% of the equity securities of a second company. 
D) more than 20% of the equity securities of a second company.

Question 18

A(n)__________ is a written promise to repay a definite sum of money either upon demand or at a fixed or determinable date in the future.

Accepted Answer

The answer of A(n)__________ is a written promise to repay...

Question 19

The length of time a note is outstanding (that is,the period of time between the date it is issued and the date it matures)is called the __________.

Accepted Answer

term
matur

Question 20

The reason the allowance method of recognizing bad debts is used is primarily because it recognizes the maximum amount of write-off in each period.

Accepted Answer

A) True 
 B)False

The contra-asset account used to reduce accounts receivable to its net realizable value is __________.

What can a company try to improve its accounts receivable turnover ratio?

One of the problems with the use of the allowance method to account for bad debts is that it often violates the matching principle.

Which of the following statements is true regarding the two allowance methods used to account for bad debts?

When a company discounts a promissory note at the bank,it receives cash at the same time it would if it held the note to maturity.

What is the purpose of an aging schedule?

Which one of the approaches for the allowance method of accounting for bad debts emphasizes matching bad debts expense with revenue on the income statement?

The process of assigning a note due in the future to a bank before its maturity date is called __________.

Textbooks.com accepts VISA for payments of purchases made by students.The credit card drafts are deposited directly in a bank account.VISA charges a 2% collection fee.Credit card drafts totaling $12,000 are deposited during September.The effect of recording the sales and deposits will include an

When using the indirect cash flow method,a decrease in accounts receivable must be __________ to net income to arrive at the increase or decrease in cash flows.

Comfort Shoes received a promissory note from a customer on April 1,2017.The face amount of the note is $2,000;the terms are 12 months and 8% annual interest.How much total interest revenue will Comfort Shoes recognize for the year ended December 31,2017?

Securities issued by corporations as a form of ownership in the business,such as common or preferred stock,are called __________.

If a company uses the direct write-off method of accounting for bad debts,

Evanston Inc.started the year with $35,000 in accounts receivable and ended the year with $50,000 in the account.Describe how information regarding the company's accounts receivable should be reflected on its statement of cash flows,assuming use of the indirect method.

Which one of the following statements is true?

Earl's Company reported its accounts receivable turnover ratio at 10 times.Its credit terms are 2/10,n/20.What does this ratio tell you about Earl's Company?

The equity method of accounting for an investment is used when a company purchases

A(n)__________ is a written promise to repay a definite sum of money either upon demand or at a fixed or determinable date in the future.

The length of time a note is outstanding (that is,the period of time between the date it is issued and the date it matures)is called the __________.

The reason the allowance method of recognizing bad debts is used is primarily because it recognizes the maximum amount of write-off in each period.

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

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Exam 7: Receivables and Investments

The contra-asset account used to reduce accounts receivable to its net realizable value is __________.

What can a company try to improve its accounts receivable turnover ratio?

One of the problems with the use of the allowance method to account for bad debts is that it often violates the matching principle.

Which of the following statements is true regarding the two allowance methods used to account for bad debts?

When a company discounts a promissory note at the bank,it receives cash at the same time it would if it held the note to maturity.

What is the purpose of an aging schedule?

Which one of the approaches for the allowance method of accounting for bad debts emphasizes matching bad debts expense with revenue on the income statement?

The process of assigning a note due in the future to a bank before its maturity date is called __________.

Textbooks.com accepts VISA for payments of purchases made by students.The credit card drafts are deposited directly in a bank account.VISA charges a 2% collection fee.Credit card drafts totaling $12,000 are deposited during September.The effect of recording the sales and deposits will include an

When using the indirect cash flow method,a decrease in accounts receivable must be __________ to net income to arrive at the increase or decrease in cash flows.

Comfort Shoes received a promissory note from a customer on April 1,2017.The face amount of the note is $2,000;the terms are 12 months and 8% annual interest.How much total interest revenue will Comfort Shoes recognize for the year ended December 31,2017?

Securities issued by corporations as a form of ownership in the business,such as common or preferred stock,are called __________.

If a company uses the direct write-off method of accounting for bad debts,

Evanston Inc.started the year with $35,000 in accounts receivable and ended the year with $50,000 in the account.Describe how information regarding the company's accounts receivable should be reflected on its statement of cash flows,assuming use of the indirect method.

Which one of the following statements is true?

Earl's Company reported its accounts receivable turnover ratio at 10 times.Its credit terms are 2/10,n/20.What does this ratio tell you about Earl's Company?

The equity method of accounting for an investment is used when a company purchases

A(n)__________ is a written promise to repay a definite sum of money either upon demand or at a fixed or determinable date in the future.

The length of time a note is outstanding (that is,the period of time between the date it is issued and the date it matures)is called the __________.

The reason the allowance method of recognizing bad debts is used is primarily because it recognizes the maximum amount of write-off in each period.

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