Question 1

Which one of the following is not an accurate statement regarding the direct write-off method of accounting for bad debts?

Accepted Answer

A) The direct write-off method has some deficiencies when accounting for bad debts. 
B) The direct write-off method ignores the possibility that partial collection of a company's outstanding accounts receivable may occur. 
C) Under the direct write-off method,an expense is increased. 
D) The allowance method for bad debts violates the matching principle,but the direct write-off method does not. 
A) The direct write-off method has some deficiencies when accounting for bad debts. 
B) The direct write-off method ignores the possibility that partial collection of a company's outstanding accounts receivable may occur. 
C) Under the direct write-off method,an expense is increased. 
D) The allowance method for bad debts violates the matching principle,but the direct write-off method does not.

Question 2

Toppson Corp.invested cash in a nine-month certificate of deposit (CD)on October 1,2017.If Toppson has an accounting period that ends on December 31,2017,when would it most likely recognize interest revenue from the CD?

Accepted Answer

A) On December 31,2017,only 
B) On July 1,2018,only 
C) Both December 31,2017 and July 1,2018 
D) On October 1,2017 
A) On December 31,2017,only 
B) On July 1,2018,only 
C) Both December 31,2017 and July 1,2018 
D) On October 1,2017

Question 3

Espat Corp.reported net sales (all on credit)of $1,600,000 and cost of goods sold of $1,100,000 for 2017.Its beginning balance of Accounts Receivable was $150,000.The accounts receivable balance decreased by $10,000 during 2017.Rounded to two decimal places,what is Espat's accounts receivable turnover ratio for 2017?

Accepted Answer

A) 7.59 
B) 10.32 
C) 10.67 
D) 11.03 
A) 7.59 
B) 10.32 
C) 10.67 
D) 11.03

Question 4

A company invests excess cash in a certificate of deposit.At the end of an accounting period before the CD matures,the company will recognize interest expense.

Accepted Answer

A) True 
 B)False

Question 5

On January 15,2017,the accounts receivable balance was $7,000 and the balance in Allowance for Doubtful Accounts was $700.On January 16,2017,a $200 uncollectible account was written off.The net realizable value of accounts receivable on January 16 immediately after the write-off is

Accepted Answer

A) $6,300. 
B) $6,800. 
C) $6,500. 
D) $7,900. 
A) $6,300. 
B) $6,800. 
C) $6,500. 
D) $7,900.

Question 6

Rural Ridge Company reported the following on its balance sheet at December 31,2017:
?
 $$\text { Accounts receivable, less allowance of } \$ 12,400 \quad \$ 500,000$$ A) How much is the net realizable value of Rural Ridge's receivables?

B) What is the balance of the Accounts Receivable account?

C) Are you able to determine whether Rural Ridge uses the allowance method or the direct write off method for uncollectibles? Why or why not?

Accepted Answer

?
 A) @#LAT-DLM&
B) @#LAT-DLM&
Rural Ridge uses the allowanc

Question 7

Beatrice Equipment
Beatrice Equipment sells merchandise only on credit.For the year ended December 31,2017,the following data are available:
 $\begin{array}{lr}
\text { Sales } & \$ 2,400,000 \
\text { Sales returns and allowances } & 60,000 \
\text { Accounts Receivable-January 1, 2017 } & 270,000 \
\text { Allowance for doubtful accounts-January 1, 2017 } & 25,600 \
\text { Collections during 2017 } & 2,426,300 \
\text { Accounts written off as uncollectible during 2017 } & 23,700
\end{array}$
-Refer to the data for Beatrice Equipment.
Assume that Beatrice Equipment estimates bad debts on an aging analysis,and the aging schedule indicates that $28,000 of the December 31,2017,accounts receivable will be uncollectible.
 A) What amount will Beatrice Equipment recognize as bad debts expense for 2017 ?

B) How much is the net realizable value of the receivables to be reported on Beatrice Equipment's balance sheet at December 31,2017?

Accepted Answer

A)$28,000 - ($25,600

Question 8

The entry required to recognize the bad debts expense for 2017 will

Accepted Answer

A) increase total assets and retained earnings. 
B) decrease total assets and retained earnings. 
C) decrease total assets and increase net income. 
D) increase total assets and decrease net income. 
A) increase total assets and retained earnings. 
B) decrease total assets and retained earnings. 
C) decrease total assets and increase net income. 
D) increase total assets and decrease net income.

Question 9

Significant influence of one company over another has been defined by the accounting profession as the ownership of what minimum percent of the second company's stock?

Accepted Answer

A) 20% 
B) 50% 
C) 100% 
D) 30% 
A) 20% 
B) 50% 
C) 100% 
D) 30%

Question 10

When using the allowance method,what are the effects on the accounting equation when a company writes off a bad debt?

Accepted Answer

A) Assets and stockholders' equity increase. 
B) Assets and stockholders' equity decrease. 
C) Assets increase and stockholders' equity decreases. 
D) There is no effect on overall assets or equity. 
A) Assets and stockholders' equity increase. 
B) Assets and stockholders' equity decrease. 
C) Assets increase and stockholders' equity decreases. 
D) There is no effect on overall assets or equity.

Question 11

Lynx Corp.
The data presented below for Lynx Corp.are for the year ended December 31,2017:
?
 $$\begin{array} { l r } 
\text { Sales (100\% on credit) } & \$ 1,000,000 \
\text { Sales returns } & 30,000 \
\text { Accounts receivable (December 31,2017) } & 170,000 \
\text { Allowance for doubtful accounts (credit balance) } & \
\quad \text { (before adjustment at December } 31,2017 ) & 1,300 \
\text { Estimated amount of uncollectible accounts based on aging analysis } & 14,000
\end{array}$$ ?
-See the data for Lynx Corp. If Lynx Corp.uses the aging of accounts receivable approach to estimate its bad debts,what amount will be reported as bad debts expense for 2017?

Accepted Answer

A) $12,700 
B) $13,700 
C) $14,000 
D) $15,300 
A) $12,700 
B) $13,700 
C) $14,000 
D) $15,300

Question 12

When a note receivable has been discounted by a company,

Accepted Answer

A) an account called discount on notes receivable is used. 
B) it will be shown as an asset of the company. 
C) it slows the collection process. 
D) it may be shown as a contingent liability in the footnotes. 
A) an account called discount on notes receivable is used. 
B) it will be shown as an asset of the company. 
C) it slows the collection process. 
D) it may be shown as a contingent liability in the footnotes.

Question 13

If a company has a choice of acceptable methods to estimate bad debts,what factors should be considered in the selection?

Accepted Answer

The percentage of net sales approach emp

Question 14

Sweetson Enterprises' comparative balance sheets included accounts receivable of $220,300 at December 31,2017,and $200,900 at December 31,2018.Sales reported on Sweetson's 2018 income statement amounted to $2,350,000.What is the amount of cash collections that Sweetson will report in the Operating Activities category of its 2018 statement of cash flows assuming that the direct method is used? ​

Accepted Answer

A) $2,369,400 
B) $2,350,000 
C) $2,771,200 
D) $2,330,600 
A) $2,369,400 
B) $2,350,000 
C) $2,771,200 
D) $2,330,600

Question 15

Mellon Corporation
The data presented below are for Mellon Corporation for the year ended December 31,2017:
??
 $\begin{array}{lr}
\text { Sales (100\% on credit) } & \$ 1,500,000 \
\text { Sales returns } & 60,000 \
\text { Accounts receivable (December 31, 2017) } & 250,000 \
\text { Allowance for doubtful accounts (credit balance) (before adjustment at December } & \
31,2017 & 3,000 \
\text { Estimated amount of uncoll ectible accounts based on an aging analysis } & 31,000
\end{array}$
-Refer to the data for Mellon Corporation. ?
If Mellon estimates its bad debts at 2% of net credit sales,what amount will be reported as bad debts expense for 2017?

Accepted Answer

A) $25,800 
B) $27,000 
C) $28,800 
D) $30,000 
A) $25,800 
B) $27,000 
C) $28,800 
D) $30,000

Question 16

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 the maturity date of the note?

Accepted Answer

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

Question 17

Why does the discounting of a note receivable with recourse result in a contingent liability? Should the liability be reported on the balance sheet? Explain.

Accepted Answer

When a note receivable is discounted wit

Question 18

The maker of a note recognizes __________ on its income statement.

Accepted Answer

The answer of The maker of a note recognizes __________...

Question 19

Genuine Parts received a promissory note from a customer on March 1,2017.The face amount of the note is $8,000;the terms are 90 days and 9% interest.What amount of interest will Genuine Parts receive when the note is paid?

Accepted Answer

A) $60 
B) $90 
C) $180 
D) $720 
A) $60 
B) $90 
C) $180 
D) $720

Question 20

Fenchurch Corp.uses the direct write-off method to account for bad debts.What are the effects of the adjustment to record the write-off of a customer's account balance?

Accepted Answer

A) Assets and liabilities decrease. 
B) Assets and stockholders' equity decrease. 
C) Stockholders' equity decrease and liabilities increase. 
D) No effect;assets increase and decrease by the same amount. 
A) Assets and liabilities decrease. 
B) Assets and stockholders' equity decrease. 
C) Stockholders' equity decrease and liabilities increase. 
D) No effect;assets increase and decrease by the same amount.

Which one of the following is not an accurate statement regarding the direct write-off method of accounting for bad debts?

Toppson Corp.invested cash in a nine-month certificate of deposit (CD)on October 1,2017.If Toppson has an accounting period that ends on December 31,2017,when would it most likely recognize interest revenue from the CD?

A company invests excess cash in a certificate of deposit.At the end of an accounting period before the CD matures,the company will recognize interest expense.

On January 15,2017,the accounts receivable balance was $7,000 and the balance in Allowance for Doubtful Accounts was $700.On January 16,2017,a $200 uncollectible account was written off.The net realizable value of accounts receivable on January 16 immediately after the write-off is

The entry required to recognize the bad debts expense for 2017 will

Significant influence of one company over another has been defined by the accounting profession as the ownership of what minimum percent of the second company's stock?

When using the allowance method,what are the effects on the accounting equation when a company writes off a bad debt?

When a note receivable has been discounted by a company,

If a company has a choice of acceptable methods to estimate bad debts,what factors should be considered in the selection?

Why does the discounting of a note receivable with recourse result in a contingent liability? Should the liability be reported on the balance sheet? Explain.

The maker of a note recognizes __________ on its income statement.

Genuine Parts received a promissory note from a customer on March 1,2017.The face amount of the note is $8,000;the terms are 90 days and 9% interest.What amount of interest will Genuine Parts receive when the note is paid?

Fenchurch Corp.uses the direct write-off method to account for bad debts.What are the effects of the adjustment to record the write-off of a customer's account balance?

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

Which one of the following is not an accurate statement regarding the direct write-off method of accounting for bad debts?

Toppson Corp.invested cash in a nine-month certificate of deposit (CD)on October 1,2017.If Toppson has an accounting period that ends on December 31,2017,when would it most likely recognize interest revenue from the CD?

A company invests excess cash in a certificate of deposit.At the end of an accounting period before the CD matures,the company will recognize interest expense.

On January 15,2017,the accounts receivable balance was $7,000 and the balance in Allowance for Doubtful Accounts was $700.On January 16,2017,a $200 uncollectible account was written off.The net realizable value of accounts receivable on January 16 immediately after the write-off is

The entry required to recognize the bad debts expense for 2017 will

Significant influence of one company over another has been defined by the accounting profession as the ownership of what minimum percent of the second company's stock?

When using the allowance method,what are the effects on the accounting equation when a company writes off a bad debt?

When a note receivable has been discounted by a company,

If a company has a choice of acceptable methods to estimate bad debts,what factors should be considered in the selection?

Why does the discounting of a note receivable with recourse result in a contingent liability? Should the liability be reported on the balance sheet? Explain.

The maker of a note recognizes __________ on its income statement.

Genuine Parts received a promissory note from a customer on March 1,2017.The face amount of the note is $8,000;the terms are 90 days and 9% interest.What amount of interest will Genuine Parts receive when the note is paid?

Fenchurch Corp.uses the direct write-off method to account for bad debts.What are the effects of the adjustment to record the write-off of a customer's account balance?

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