Question 1

Dividends receivable,interest receivable,and taxes receivable are generally categorized as other receivables.

Accepted Answer

A) True 
 B)False

Question 2

On October 1,2019,ABC Company loaned A.Jenkins $13,000 at an annual interest rate of 3% with a maturity date of April 1,2020.On October 1,2019,ABC Company will record ________.

Accepted Answer

A)  no entry since the note is due on April 1, 2020 
B)  a debit to Notes Receivable - A. Jenkins of $13,390 
C)  a credit to Notes Payable - A. Jenkins of $13,000 
D)  a debit to Notes Receivable - A. Jenkins of $13,000 
A)  no entry since the note is due on April 1, 2020 
B)  a debit to Notes Receivable - A. Jenkins of $13,390 
C)  a credit to Notes Payable - A. Jenkins of $13,000 
D)  a debit to Notes Receivable - A. Jenkins of $13,000

Question 3

Interest on a $40,000 note at 10% for 45 days is $493.(Use a 360 day year.Round your answer to the nearest dollar.)

Accepted Answer

A) True 
 B)False

Question 4

A company's liquidity can be evaluated using all of the following ratios EXCEPT ________.

Accepted Answer

A)  Return on assets ratio 
B)  Acid-test ratio 
C)  Accounts receivable turnover 
D)  Days' sales in receivables 
A)  Return on assets ratio 
B)  Acid-test ratio 
C)  Accounts receivable turnover 
D)  Days' sales in receivables

Question 5

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

Accepted Answer

A)  cash including cash equivalents, inventory, short-term investments, net current receivables 
B)  accounts receivable and inventory 
C)  cash including cash equivalents, short-term investments, net current receivables 
D)  total current assets 
A)  cash including cash equivalents, inventory, short-term investments, net current receivables 
B)  accounts receivable and inventory 
C)  cash including cash equivalents, short-term investments, net current receivables 
D)  total current assets

Question 6

The number of times a company collects the average accounts receivable balance in a year is known as the accounts receivable turnover ratio.

Accepted Answer

A) True 
 B)False

Question 7

When a business factors its accounts receivables,the business ________.

Accepted Answer

A)  uses the receivables as security for a loan 
B)  no longer has to deal with the collection of the receivables from the customers 
C)  receives the total amount of the receivables from the factor 
D)  receives cash, less an applicable fee, after the factor collects from the customers 
A)  uses the receivables as security for a loan 
B)  no longer has to deal with the collection of the receivables from the customers 
C)  receives the total amount of the receivables from the factor 
D)  receives cash, less an applicable fee, after the factor collects from the customers

Question 8

Separation of cash-handling and cash-accounting duties is a critical element of internal control over receivables.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is TRUE?

Accepted Answer

A)  Accounts receivable are more liquid than cash. 
B)  Notes receivable are always classified as current assets. 
C)  Notes receivable usually have longer collection terms than accounts receivable. 
D)  Accounts receivable are liabilities. 
A)  Accounts receivable are more liquid than cash. 
B)  Notes receivable are always classified as current assets. 
C)  Notes receivable usually have longer collection terms than accounts receivable. 
D)  Accounts receivable are liabilities.

Question 10

If the maker of the note does not pay at maturity,the note has expired and is no longer in force.

Accepted Answer

A) True 
 B)False

Question 11

Separate customer accounts receivable are called subsidiary accounts.

Accepted Answer

A) True 
 B)False

Question 12

On August 14,Second Street Bank lent $260,000 to City Restaurant on a 75 day,4% note.What is the maturity date of the note?

Accepted Answer

A)  Oct. 27 
B)  Oct. 28 
C)  Oct. 29 
D)  Oct. 30 
A)  Oct. 27 
B)  Oct. 28 
C)  Oct. 29 
D)  Oct. 30

Question 13

Logan Sales provides the following information: Net credit sales: $790,000
Beginning net accounts receivable: $43,000
Ending net accounts receivable: $22,000
Calculate the accounts receivable turnover ratio.(Round your answer to the nearest whole number.)

Accepted Answer

A)  18 times 
B)  24 times 
C)  36 times 
D)  34 times 
A)  18 times 
B)  24 times 
C)  36 times 
D)  34 times

Question 14

Interest rates are stated on an annual basis,therefore the time in the interest formula is always stated as one year.

Accepted Answer

A) True 
 B)False

Question 15

The entity that signs the promissory note and promises to pay the required amount is the ________.

Accepted Answer

A)  maker of the note 
B)  banker of the note 
C)  holder of the note 
D)  payee of the note 
A)  maker of the note 
B)  banker of the note 
C)  holder of the note 
D)  payee of the note

Question 16

On October 1,2019,Fashion Jewelers accepted a 4-month,12% note for $7500 in settlement of an overdue account receivable.The accounting period ends on December 31.Calculate the accrued interest on the note at December 31,2019.(Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar.)

Accepted Answer

A)  $225 
B)  $300 
C)  $900 
D)  $450 
A)  $225 
B)  $300 
C)  $900 
D)  $450

Question 17

When comparing the direct write-off and allowance methods,the major difference is ________.

Accepted Answer

A)  when to record bad debts expense 
B)  when to recognize revenue 
C)  determining the balance of the Allowance for Bad Debts account 
D)  developing adequate procedures for granting credit 
A)  when to record bad debts expense 
B)  when to recognize revenue 
C)  determining the balance of the Allowance for Bad Debts account 
D)  developing adequate procedures for granting credit

Question 18

During June 2019,Andy Company had the following transactions:
1.Sales of $185,000 ($142,000 on account,$43,000 for cash).
2.Collections on account,$128,000
3.Write-offs of uncollectible receivables,$1,900
4.Recovery of receivable previously written off,$600.
Additional information:
Ignore Cost of Goods Sold
Andy uses the allowance method for uncollectibles.
Andy estimates that 4.50% of its accounts receivable will be uncollectible.
On June 1,2019,the Accounts Receivable balance was $25,000 and the Allowance for
Bad Debts had a normal account balance of $1,125.
Requirements:
a.Prepare the journal entries for the June 2019 transactions.Because the transactions represent a summary of events,use June 30 for all dates.Omit explanations.
b.Prepare the June 30,2019 adjusting journal entry.Omit explanation.
c.What is the net realizable value of Accounts Receivable on June 30,2019 (after the adjusting journal entry has been posted)? Show computations and label your work.

Accepted Answer

The answer of During June 2019,Andy Company had the following...

Question 19

Which of the following is TRUE of the acid-test ratio?

Accepted Answer

A)  It measures a company's ability to pay its current liabilities. 
B)  It measures the ability of the company to earn net income. 
C)  It measures a company's ability to meet its short-term obligations with cash and cash equivalents. 
D)  It indicates how much cash could be realized by selling the inventory. 
A)  It measures a company's ability to pay its current liabilities. 
B)  It measures the ability of the company to earn net income. 
C)  It measures a company's ability to meet its short-term obligations with cash and cash equivalents. 
D)  It indicates how much cash could be realized by selling the inventory.

Question 20

Which of the following should be classified as a long-term asset?

Accepted Answer

A)  Interest Receivable 
B)  Accounts Receivable 
C)  Notes Receivable, due in 5 years 
D)  Cash Equivalents 
A)  Interest Receivable 
B)  Accounts Receivable 
C)  Notes Receivable, due in 5 years 
D)  Cash Equivalents

Exam 9: Receivables

Dividends receivable,interest receivable,and taxes receivable are generally categorized as other receivables.

On October 1,2019,ABC Company loaned A.Jenkins $13,000 at an annual interest rate of 3% with a maturity date of April 1,2020.On October 1,2019,ABC Company will record ________.

Interest on a $40,000 note at 10% for 45 days is $493.(Use a 360 day year.Round your answer to the nearest dollar.)

A company's liquidity can be evaluated using all of the following ratios EXCEPT ________.

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

The number of times a company collects the average accounts receivable balance in a year is known as the accounts receivable turnover ratio.

When a business factors its accounts receivables,the business ________.

Separation of cash-handling and cash-accounting duties is a critical element of internal control over receivables.

Which of the following statements is TRUE?

If the maker of the note does not pay at maturity,the note has expired and is no longer in force.

Separate customer accounts receivable are called subsidiary accounts.

On August 14,Second Street Bank lent $260,000 to City Restaurant on a 75 day,4% note.What is the maturity date of the note?

Logan Sales provides the following information: Net credit sales: $790,000 Beginning net accounts receivable: $43,000 Ending net accounts receivable: $22,000 Calculate the accounts receivable turnover ratio.(Round your answer to the nearest whole number.)

Interest rates are stated on an annual basis,therefore the time in the interest formula is always stated as one year.

The entity that signs the promissory note and promises to pay the required amount is the ________.

When comparing the direct write-off and allowance methods,the major difference is ________.

Which of the following is TRUE of the acid-test ratio?

Which of the following should be classified as a long-term asset?

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

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