Question 1

The net realizable value of Accounts Receivable is calculated by subtracting Bad Debts Expense from Accounts Receivable.

Accepted Answer

A) True 
 B)False

Question 2

Credit department employees must have access to cash in order to exercise effective internal control over receivables.

Accepted Answer

A) True 
 B)False

Question 3

On January 1,All City Services has the following balances: Accounts Receivable $22,000
Bad Debts Expense $0
All City has the following transactions during January: Credit sales of $120,000,collections of credit sales of $84,000,and write-offs of $18,000.All City uses the direct write-off method.The amount of Bad Debts Expense for January is ________.

Accepted Answer

A)  $22,000 
B)  $25,714 
C)  $12,600 
D)  $18,000 
A)  $22,000 
B)  $25,714 
C)  $12,600 
D)  $18,000

Question 4

The direct write-off method for uncollectible accounts violates the matching principle.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is included in the denominator of the acid-test ratio?

Accepted Answer

A)  total current liabilities less accounts payable 
B)  total liabilities 
C)  total current liabilities 
D)  total current assets 
A)  total current liabilities less accounts payable 
B)  total liabilities 
C)  total current liabilities 
D)  total current assets

Question 6

The percent-of-sales method calculates bad debts expense as a percentage of net credit sales.

Accepted Answer

A) True 
 B)False

Question 7

The two major types of receivables are interest receivable and taxes receivable.

Accepted Answer

A) True 
 B)False

Question 8

Accounts receivable are usually collected within a short period of time and are therefore reported as a current liability on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 9

The Allowance for Bad Debts account ________.

Accepted Answer

A)  is a liability account 
B)  holds the pool of "unknown" uncollectible accounts 
C)  increases with a debit 
D)  is added to accounts receivable 
A)  is a liability account 
B)  holds the pool of "unknown" uncollectible accounts 
C)  increases with a debit 
D)  is added to accounts receivable

Question 10

On January 1,Southwest Company accepted a one-year note for $60,000 at 8% from one of its customers.When the note matured on December 31,the customer was unable to pay,and the company recorded the dishonor.The amount of the debit recorded on December 31 is ________.

Accepted Answer

A)  $55,200 
B)  $4800 
C)  $60,000 
D)  $64,800 
A)  $55,200 
B)  $4800 
C)  $60,000 
D)  $64,800

Question 11

Provide a brief definition of each of the following terms.
 $$\begin{array} { | l | l | } 
\hline \text { Term } & \text { Brief Definition } \
\hline \text { Debtor } & \
\hline \text { Pledging Receivables } & \
\hline \text { Accounts Receivable } & \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { | l | l | } 
\hline \t

Question 12

The Allowance for Bad Debts account has a debit balance of $9000 before the adjusting entry for bad debts expense.After analyzing the accounts in the accounts receivable subsidiary ledger,the company's management estimates that uncollectible accounts will be $11,000.What will be the amount of the adjustment in the Allowance for Bad Debts account?

Accepted Answer

A)  $19,250 
B)  $11,000 
C)  $18,900 
D)  $20,000 
A)  $19,250 
B)  $11,000 
C)  $18,900 
D)  $20,000

Question 13

Modern Clothing Store reported the following selected items at June 30,2019 (previous year - 2018 - amounts are also given as needed):
 $\begin{array}{|l|r|}
\hline\text { Cash } & \$ 80,000 \
\hline \text { Accounts Receivable, net: } & \
\text { June } 30,2019 & 45,000 \
\text { June } 30,2018 & 53,000 \
\hline \text { Accounts Payable } & 55,000 \
\hline \text { Cost of Goods Sold } & 288,000 \
\hline \text { Merchandise Inventory } & \
\text { June } 30,2019 & 70,000 \
\text { June } 30,2018 & 90,000 \
\hline \text { Net Credit Sales Revenue } & 480,000 \
\hline \text { Long-Term Assets } & 220,000 \
\hline \text { Long-Term Liabilities } & 140,000 \
\hline \text { Other Current Assets } & 150,000 \
\hline \text { Other Current Liabilities } & 130,000 \
\hline \text { Short-term Investments } & 40,000\
\hline
\end{array}$ Compute Modern's accounts receivable turnover ratio for the year ending June 30,2019.Show your computations.(Round the answer to 2 decimal places.)

Accepted Answer

Accounts receivable turnover r

The net realizable value of Accounts Receivable is calculated by subtracting Bad Debts Expense from Accounts Receivable.

Credit department employees must have access to cash in order to exercise effective internal control over receivables.

The direct write-off method for uncollectible accounts violates the matching principle.

Which of the following is included in the denominator of the acid-test ratio?

The percent-of-sales method calculates bad debts expense as a percentage of net credit sales.

The two major types of receivables are interest receivable and taxes receivable.

Accounts receivable are usually collected within a short period of time and are therefore reported as a current liability on the balance sheet.

The Allowance for Bad Debts account ________.

On January 1,Southwest Company accepted a one-year note for $60,000 at 8% from one of its customers.When the note matured on December 31,the customer was unable to pay,and the company recorded the dishonor.The amount of the debit recorded on December 31 is ________.

Provide a brief definition of each of the following terms. Term Brief Definition Debtor Pledging Receivables Accounts Receivable

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Plant Assets,natural Resources,and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters

Exam 9: Receivables

The net realizable value of Accounts Receivable is calculated by subtracting Bad Debts Expense from Accounts Receivable.

Credit department employees must have access to cash in order to exercise effective internal control over receivables.

The direct write-off method for uncollectible accounts violates the matching principle.

Which of the following is included in the denominator of the acid-test ratio?

The percent-of-sales method calculates bad debts expense as a percentage of net credit sales.

The two major types of receivables are interest receivable and taxes receivable.

Accounts receivable are usually collected within a short period of time and are therefore reported as a current liability on the balance sheet.

The Allowance for Bad Debts account ________.

On January 1,Southwest Company accepted a one-year note for $60,000 at 8% from one of its customers.When the note matured on December 31,the customer was unable to pay,and the company recorded the dishonor.The amount of the debit recorded on December 31 is ________.

Provide a brief definition of each of the following terms. Term Brief Definition Debtor Pledging Receivables Accounts Receivable

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Plant Assets,natural Resources,and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters