Question 1

The holder of a note adjusts for accrued interest by debiting Interest Receivable and crediting Interest Income.

Accepted Answer

A) True 
 B)False

Question 2

The account Allowance for Uncollectible Accounts is classified as a(n)

Accepted Answer

A) contra account to Uncollectible Accounts Expense. 
B) expense. 
C) liability. 
D) contra account to Accounts Receivable. 
A) contra account to Uncollectible Accounts Expense. 
B) expense. 
C) liability. 
D) contra account to Accounts Receivable.

Question 3

Caudill Sales Company made most of its sales on credit during its first year of operation,2014.At the end of the year,accounts receivable amounted to $100,000.On December 31,2014,management reviewed the collectible status of the accounts receivable.Approximately $6,000 of the $100,000 of accounts receivable were estimated to be uncollectible.As per the accounts receivable aging method the adjusting entry that would be made on December 31 of that year is:

Accepted Answer

A) Uncollectible Accounts Expense 6,000 Accounts Receivable 6,000 
B) Allowance for Uncollectible Accounts 10,000 Uncollectible Accounts Expense 10,000 
C) Uncollectible Accounts Expense 6,000 Allowance for Uncollectible Accounts 6,000 
D) Allowance for Uncollectible Accounts 10,000 Accounts Receivable 10,000 
A) Uncollectible Accounts Expense 6,000 Accounts Receivable 6,000 
B) Allowance for Uncollectible Accounts 10,000 Uncollectible Accounts Expense 10,000 
C) Uncollectible Accounts Expense 6,000 Allowance for Uncollectible Accounts 6,000 
D) Allowance for Uncollectible Accounts 10,000 Accounts Receivable 10,000

Question 4

The higher the receivables turnover,the lower the days' sales uncollected.

Accepted Answer

A) True 
 B)False

Question 5

The balance in Allowance for Uncollectible Accounts must be considered prior to end-of-period adjustment when using which of the following methods?

Accepted Answer

A) Direct charge-off method 
B) Both direct charge-off method and percentage of net sales method 
C) Percentage of net sales method 
D) Accounts receivable aging method 
A) Direct charge-off method 
B) Both direct charge-off method and percentage of net sales method 
C) Percentage of net sales method 
D) Accounts receivable aging method

Question 6

The direct charge-off method makes no attempt to match bad-debt losses with revenues.

Accepted Answer

A) True 
 B)False

Question 7

The sale or transfer of accounts receivable to raise funds is called

Accepted Answer

A) discounting. 
B) collateralizing. 
C) pledging. 
D) factoring. 
A) discounting. 
B) collateralizing. 
C) pledging. 
D) factoring.

Question 8

A company that factors its receivables will have a less favorable receivable turnover than a company that does not factor.

Accepted Answer

A) True 
 B)False

Question 9

The general ledger account for Accounts Receivable shows a debit balance of $50,000.Allowance for Uncollectible Accounts has a credit balance of $3,000.Net sales for the year were $500,000.In the past,3 percent of sales have proved uncollectible,and an aging of accounts receivable resulted in an estimate of $20,000 of uncollectible accounts receivable. 
-Using the accounts receivable aging method,the Allowance for Uncollectible Accounts balance (after adjustment)would be

Accepted Answer

A) $17,000. 
B) $20,000. 
C) $21,500. 
D) $23,000. 
A) $17,000. 
B) $20,000. 
C) $21,500. 
D) $23,000.

Question 10

The interest on a three-month,12 percent,$16,200 note receivable is

Accepted Answer

A) $486. 
B) $162. 
C) $324. 
D) $1,944. 
A) $486. 
B) $162. 
C) $324. 
D) $1,944.

Question 11

Loans to company employees should be included with accounts receivable on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 12

A company's acceptance of credit cards like Visa is an example of

Accepted Answer

A) securitization. 
B) factoring with recourse. 
C) discounting. 
D) factoring without recourse. 
A) securitization. 
B) factoring with recourse. 
C) discounting. 
D) factoring without recourse.

Question 13

Assume that on October 1,a note which has a face value of $2,000,bears interest at 6 percent for 90 days,received from a customer as an extension of his past-due account is honored on its due date.The entry that would be made to record the receipt on due date is:

Accepted Answer

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

Question 14

Purchasing receivables with recourse is riskier than purchasing them without recourse.

Accepted Answer

A) True 
 B)False

Question 15

Explain the two methods used to estimate uncollectible accounts.

Accepted Answer

One method analyzes the net credit sales

Question 16

If net sales total $50,000,beginning accounts receivable was $10,000,and ending accounts receivable is 16,000,what is the days' sales collected?

Accepted Answer

A) 73 days 
B) 96 days 
C) 118 days 
D) 192 days 
A) 73 days 
B) 96 days 
C) 118 days 
D) 192 days

Question 17

The general ledger account for Accounts Receivable shows a debit balance of $50,000.Allowance for Uncollectible Accounts has a credit balance of $3,000.Net sales for the year were $500,000.In the past,3 percent of sales have proved uncollectible,and an aging of accounts receivable resulted in an estimate of $20,000 of uncollectible accounts receivable. 
-Using the accounts receivable aging method,the entry to record Uncollectible Accounts Expense would be:

Accepted Answer

A) Uncollectible Accounts Expense 21,500 Allowance for Uncollectible Accounts 21,500 
B) Uncollectible Accounts Expense 17,000 Allowance for Uncollectible Accounts 17,000 
C) Allowance for Uncollectible Accounts 20,000 Uncollectible Accounts Expense 20,000 
D) Allowance for Uncollectible Accounts 23,000 Uncollectible Accounts Expense 23,000 
A) Uncollectible Accounts Expense 21,500 Allowance for Uncollectible Accounts 21,500 
B) Uncollectible Accounts Expense 17,000 Allowance for Uncollectible Accounts 17,000 
C) Allowance for Uncollectible Accounts 20,000 Uncollectible Accounts Expense 20,000 
D) Allowance for Uncollectible Accounts 23,000 Uncollectible Accounts Expense 23,000

Question 18

The debtor named in a promissory note is called the payee.

Accepted Answer

A) True 
 B)False

Question 19

Determine the interest on the following notes payable:
a.$6,000 at 10 percent for 60 days
b.$600 at 16 percent for 4 months
c.$10,000 at 12 percent for 45 days
d.$900 at 14 percent for 30 days

Accepted Answer

a.$98.63 ($6,000 × 0.10 × 60/3

Question 20

Under the allowance method,Uncollectible Accounts Expense is not recorded when an individual customer defaults.

Accepted Answer

A) True 
 B)False

Exam 9: Receivables

The holder of a note adjusts for accrued interest by debiting Interest Receivable and crediting Interest Income.

The account Allowance for Uncollectible Accounts is classified as a(n)

The higher the receivables turnover,the lower the days' sales uncollected.

The balance in Allowance for Uncollectible Accounts must be considered prior to end-of-period adjustment when using which of the following methods?

The direct charge-off method makes no attempt to match bad-debt losses with revenues.

The sale or transfer of accounts receivable to raise funds is called

A company that factors its receivables will have a less favorable receivable turnover than a company that does not factor.

The interest on a three-month,12 percent,$16,200 note receivable is

Loans to company employees should be included with accounts receivable on the balance sheet.

A company's acceptance of credit cards like Visa is an example of

Assume that on October 1,a note which has a face value of $2,000,bears interest at 6 percent for 90 days,received from a customer as an extension of his past-due account is honored on its due date.The entry that would be made to record the receipt on due date is:

Purchasing receivables with recourse is riskier than purchasing them without recourse.

Explain the two methods used to estimate uncollectible accounts.

If net sales total $50,000,beginning accounts receivable was $10,000,and ending accounts receivable is 16,000,what is the days' sales collected?

The debtor named in a promissory note is called the payee.

Determine the interest on the following notes payable: a.$6,000 at 10 percent for 60 days b.$600 at 16 percent for 4 months c.$10,000 at 12 percent for 45 days d.$900 at 14 percent for 30 days

Under the allowance method,Uncollectible Accounts Expense is not recorded when an individual customer defaults.

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis and Capital Budgeting

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