Question 1

Factoring is an option available to a business to reduce the risk of uncollectible accounts receivable.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is true of the direct write-off method?

Accepted Answer

A) GAAP requires public companies to follow the direct write-off method. 
B) It provides better matching of revenues with expenses. 
C) It results in more accurate net income than any other method. 
D) It is only suitable for small companies that have very few uncollectible receivables. 
A) GAAP requires public companies to follow the direct write-off method. 
B) It provides better matching of revenues with expenses. 
C) It results in more accurate net income than any other method. 
D) It is only suitable for small companies that have very few uncollectible receivables.

Question 3

The direct write-off method of accounting for uncollectible receivables is primarily used by small,nonpublic companies.

Accepted Answer

A) True 
 B)False

Question 4

The following information is from the 2017 records of Robin Antique Shop:
 
Bad debts expense is estimated by the percent-of-sales method.Management estimates that 3% of net credit sales will be uncollectible.The ending balance of the Allowance for Bad Debts account after adjustment will be ________.

Accepted Answer

A) $6,550 
B) $4,730 
C) $7,330 
D) $3,950 
A) $6,550 
B) $4,730 
C) $7,330 
D) $3,950

Question 5

Tanglewood Clothing Store reported the following selected items at June 30,2017 (last year - 2016 - amounts are also given as needed):
   
Compute Tanglewood's days' sales in receivables for 2017.Show your computations.

Accepted Answer

Days' sales in recei

Question 6

A method of accounting for uncollectible receivables in which the company estimates bad debts expense instead of waiting to see from which customers the company will not be able to collect is known as the allowance method.

Accepted Answer

A) True 
 B)False

Question 7

On December 1,2017,Summit,Inc.sold machinery to a customer for $22,000.The customer could not pay at the time of sale but agreed to pay 10 months later and signed a 10-month note at 10% interest.How much interest revenue was earned during 2018? (Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar. )

Accepted Answer

A) $1,100 
B) $2,200 
C) $2,017 
D) $1,650 
A) $1,100 
B) $2,200 
C) $2,017 
D) $1,650

Question 8

On November 1,2017,Kelemen Jewelers accepted a 3-month,15% note for $6,000 in settlement of an overdue account receivable.The accounting period ends in December.Give the journal entry to record the accrued interest at the year end.

Accepted Answer

@#IMG-DLM&
Explanation:
Calcul

Question 9

The acid-test ratio is a more stringent measure of liquidity than the cash ratio.

Accepted Answer

A) True 
 B)False

Question 10

The maturity date for a six-month note issued on January 15 would be ________.

Accepted Answer

A) July 15 
B) July 14 
C) July 16 
D) July 10 
A) July 15 
B) July 14 
C) July 16 
D) July 10

Question 11

Separate customer accounts receivable are called subsidiary accounts.

Accepted Answer

A) True 
 B)False

Question 12

What is the acid-test ratio for a merchant with the following account balances? (Round your answer to two decimal places. )

Accepted Answer

A) 0.76 
B) 0.42 
C) 0.61 
D) 0.82 
A) 0.76 
B) 0.42 
C) 0.61 
D) 0.82

Question 13

A company has net credit sales of $94,000,beginning net accounts receivable of $22,000 and ending net accounts receivable of $18,000.Calculate the days' sales in receivables.(Round any intermediate calculations to two decimal places,and your final answer to the nearest whole day. )

Accepted Answer

A) 73 days 
B) 48 days 
C) 91 days 
D) 78 days 
A) 73 days 
B) 48 days 
C) 91 days 
D) 78 days

Question 14

Companies that follow GAAP are required to use the direct write-off method for uncollectible accounts receivable.

Accepted Answer

A) True 
 B)False

Question 15

The direct write-off method is only acceptable for companies that have very few uncollectible receivables.

Accepted Answer

A) True 
 B)False

Question 16

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 17

Which of the following is not a method of estimating the amount of bad debt expense at the end of the accounting period?

Accepted Answer

A) percent-of-receivables method 
B) percent-of-sales method 
C) direct write-off method 
D) aging-of-receivables method 
A) percent-of-receivables method 
B) percent-of-sales method 
C) direct write-off method 
D) aging-of-receivables method

Question 18

A company issues a 140-day,14% note for $18,000.What is the principal amount of the note? (Round your answer to the nearest dollar. )

Accepted Answer

A) $20,520 
B) $18,000 
C) $17,020 
D) $18,980 
A) $20,520 
B) $18,000 
C) $17,020 
D) $18,980

Question 19

At the beginning of 2017,Delicious Drinks,Inc.has the following account balances:
 
Bad Debts Expense $0
During the year,credit sales amounted to $810,000.Cash collected on credit sales amounted to $770,000,and $17,000 has been written off.At the end of the year,the company adjusted for bad debts expense using the percent-of-sales method and applied a rate,based on past history,of 2.5%.The ending balance of Accounts Receivable is ________.

Accepted Answer

A) $40,000 
B) $63,000 
C) $40,500 
D) $17,000 
A) $40,000 
B) $63,000 
C) $40,500 
D) $17,000

Question 20

At the beginning of 2017,Yummy Cupcakes,Inc.has the following ledger balances:
Accounts Receivable $40,000 (Debit)
Allowance for Bad Debts $5,000 (Credit)
During the year,credit sales amounted to $820,000.Cash collected on credit sales amounted to $750,000,and $16,000 has been written off.Yummy Cupcakes uses the aging-of-receivables method to record bad debts expense.The estimate of uncollectible accounts was $29,000.The ending balance in the Allowance for Bad Debts is ________.

Accepted Answer

A) $40,000 
B) $16,000 
C) $29,000 
D) $24,000 
A) $40,000 
B) $16,000 
C) $29,000 
D) $24,000

Exam 9: Receivables

Factoring is an option available to a business to reduce the risk of uncollectible accounts receivable.

Which of the following statements is true of the direct write-off method?

The direct write-off method of accounting for uncollectible receivables is primarily used by small,nonpublic companies.

The following information is from the 2017 records of Robin Antique Shop: Bad debts expense is estimated by the percent-of-sales method.Management estimates that 3% of net credit sales will be uncollectible.The ending balance of the Allowance for Bad Debts account after adjustment will be ________.

Tanglewood Clothing Store reported the following selected items at June 30,2017 (last year - 2016 - amounts are also given as needed): Compute Tanglewood's days' sales in receivables for 2017.Show your computations.

A method of accounting for uncollectible receivables in which the company estimates bad debts expense instead of waiting to see from which customers the company will not be able to collect is known as the allowance method.

On November 1,2017,Kelemen Jewelers accepted a 3-month,15% note for $6,000 in settlement of an overdue account receivable.The accounting period ends in December.Give the journal entry to record the accrued interest at the year end.

The acid-test ratio is a more stringent measure of liquidity than the cash ratio.

The maturity date for a six-month note issued on January 15 would be ________.

Separate customer accounts receivable are called subsidiary accounts.

What is the acid-test ratio for a merchant with the following account balances? (Round your answer to two decimal places. )

A company has net credit sales of $94,000,beginning net accounts receivable of $22,000 and ending net accounts receivable of $18,000.Calculate the days' sales in receivables.(Round any intermediate calculations to two decimal places,and your final answer to the nearest whole day. )

Companies that follow GAAP are required to use the direct write-off method for uncollectible accounts receivable.

The direct write-off method is only acceptable for companies that have very few uncollectible receivables.

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

Which of the following is not a method of estimating the amount of bad debt expense at the end of the accounting period?

A company issues a 140-day,14% note for $18,000.What is the principal amount of the note? (Round your answer to the nearest dollar. )

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