Question 1

The aging-of-receivables method is a balance sheet approach of estimating uncollectible accounts.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Charms,Inc.has determined that an account receivable of $125 is uncollectible.The company uses the direct write-off method.Which of the following entries is required to record the write-off?

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 4

Under the direct write-off method,the entry to write off an uncollectible account will include ________.

Accepted Answer

A) a debit to Bad Debts Expense account 
B) a debit to the customer's Account Receivable 
C) a credit to the Allowance for Bad Debts 
D) No entry is made to write off uncollectible accounts. 
A) a debit to Bad Debts Expense account 
B) a debit to the customer's Account Receivable 
C) a credit to the Allowance for Bad Debts 
D) No entry is made to write off uncollectible accounts.

Question 5

Accounts Receivable has a balance of $34,000,and the Allowance for Bad Debts has a credit balance of $3,400.The allowance method is used.What is the net realizable value of Accounts Receivable before and after a $2,300 account receivable is written off?

Accepted Answer

A) $30,600;$30,600 
B) $28,300;$28,300 
C) $30,600;$28,300 
D) $28,300;$32,900 
A) $30,600;$30,600 
B) $28,300;$28,300 
C) $30,600;$28,300 
D) $28,300;$32,900

Question 6

A company has net credit sales of $1,200,000,beginning net accounts receivable of $260,000,and ending net accounts receivable of $202,000.What is the days' sales in accounts receivable? (Round any intermediate calculations to two decimal places,and your final answer to the nearest whole day. )

Accepted Answer

A) 70 days 
B) 141 days 
C) 61 days 
D) 79 days 
A) 70 days 
B) 141 days 
C) 61 days 
D) 79 days

Question 7

On October 1,2017,Ealys Jewelers accepted a 4-month,14% note for $7,500 in settlement of an overdue account receivable.The accounting period ends on December 31.Calculate the accrued interest on the note at December 31,2017.(Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar. )

Accepted Answer

A) $263 
B) $350 
C) $1,050 
D) $525 
A) $263 
B) $350 
C) $1,050 
D) $525

Question 8

Grabbe Enterprises uses the allowance method to account for uncollectible receivables.When an uncollectible account is written off,________.

Accepted Answer

A) the Bad Debt Expense account is debited 
B) no entry is required because bad debt expense is estimated at the end of the accounting period 
C) the write off has no effect on net income 
D) the Allowance for Bad Debts account is credited 
A) the Bad Debt Expense account is debited 
B) no entry is required because bad debt expense is estimated at the end of the accounting period 
C) the write off has no effect on net income 
D) the Allowance for Bad Debts account is credited

Question 9

On January 1,Springfield Corp.accepted a one-year note for $5,000 at 4% from one of its customers.When the note matured on December 31,the customer was unable to pay,and the company treated it as a dishonored note.Prepare the journal entry that Springfield will make to record the dishonored note.

Accepted Answer

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Explanati

Question 10

The Allowance for Bad Debts has a credit balance of $7,500 before the adjusting entry for bad debts expense.After analyzing the accounts in the accounts receivable subsidiary ledger using the aging-of- receivables method,the company's management estimates that uncollectible accounts will be $17,000.What will be the amount of Bad Debts Expense reported on the income statement?

Accepted Answer

A) $24,500 
B) $9,500 
C) $17,000 
D) $7,500 
A) $24,500 
B) $9,500 
C) $17,000 
D) $7,500

Question 11

The acid-test ratio is also known as the quick ratio.

Accepted Answer

A) True 
 B)False

Question 12

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 13

The use of the allowance method to record bad debts expense violates the matching principle.

Accepted Answer

A) True 
 B)False

Question 14

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 15

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

Accepted Answer

A) True 
 B)False

Question 16

Accounts Receivable has a balance of $6,000,and the Allowance for Bad Debts has a credit balance of $400.The allowance method is used.What is the net realizable value of Accounts Receivable after a $150 account receivable is written off?

Accepted Answer

A) $5,450 
B) $5,750 
C) $5,600 
D) $6,000 
A) $5,450 
B) $5,750 
C) $5,600 
D) $6,000

Question 17

Which of the following is a disadvantage when a business accepts credit cards or debit cards from customers?

Accepted Answer

A) The business bears the responsibility of collecting cash from the customer. 
B) The business bears the risk of nonpayment by the customer. 
C) The business pays a processing fee. 
D) The business checks customers' credit ratings. 
A) The business bears the responsibility of collecting cash from the customer. 
B) The business bears the risk of nonpayment by the customer. 
C) The business pays a processing fee. 
D) The business checks customers' credit ratings.

Question 18

An acid-test ratio of 1.0 is considered safer than a ratio of 0.50.

Accepted Answer

A) True 
 B)False

Question 19

The days' sales in receivables for Barker Sales is 35.The days' sales in receivables for Xanadu Company is 25.This suggests that Xanadu is having greater difficulty than Barker is in collecting its accounts receivable.

Accepted Answer

A) True 
 B)False

Question 20

When determining the date of maturity of a note,omit the date the note was issued.

Accepted Answer

A) True 
 B)False

Exam 9: Receivables

The aging-of-receivables method is a balance sheet approach of estimating uncollectible accounts.

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

Charms,Inc.has determined that an account receivable of $125 is uncollectible.The company uses the direct write-off method.Which of the following entries is required to record the write-off?

Under the direct write-off method,the entry to write off an uncollectible account will include ________.

Accounts Receivable has a balance of $34,000,and the Allowance for Bad Debts has a credit balance of $3,400.The allowance method is used.What is the net realizable value of Accounts Receivable before and after a $2,300 account receivable is written off?

A company has net credit sales of $1,200,000,beginning net accounts receivable of $260,000,and ending net accounts receivable of $202,000.What is the days' sales in accounts receivable? (Round any intermediate calculations to two decimal places,and your final answer to the nearest whole day. )

Grabbe Enterprises uses the allowance method to account for uncollectible receivables.When an uncollectible account is written off,________.

On January 1,Springfield Corp.accepted a one-year note for $5,000 at 4% from one of its customers.When the note matured on December 31,the customer was unable to pay,and the company treated it as a dishonored note.Prepare the journal entry that Springfield will make to record the dishonored note.

The acid-test ratio is also known as the quick ratio.

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

The use of the allowance method to record bad debts expense violates the matching principle.

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

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

Accounts Receivable has a balance of $6,000,and the Allowance for Bad Debts has a credit balance of $400.The allowance method is used.What is the net realizable value of Accounts Receivable after a $150 account receivable is written off?

Which of the following is a disadvantage when a business accepts credit cards or debit cards from customers?

An acid-test ratio of 1.0 is considered safer than a ratio of 0.50.

The days' sales in receivables for Barker Sales is 35.The days' sales in receivables for Xanadu Company is 25.This suggests that Xanadu is having greater difficulty than Barker is in collecting its accounts receivable.

When determining the date of maturity of a note,omit the date the note was issued.

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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