Question 1

Compaq had net sales of $10,500 million.Its average account receivables were $1,750 million.Its accounts receivable turnover was 6.

Accepted Answer

A) True 
 B)False

Question 2

As long as a company accurately records credit sales information,it is not necessary to have accounts for specific customers.

Accepted Answer

A) True 
 B)False

Question 3

When a maker of a note honours a note:

Accepted Answer

A)  The note is signed. 
B)  The note is paid off. 
C)  The note is written. 
D)  The note is notarized. 
E)  The note is cosigned. 
A)  The note is signed. 
B)  The note is paid off. 
C)  The note is written. 
D)  The note is notarized. 
E)  The note is cosigned.

Question 4

Capilano Company has a July 31 year-end.You have been provided with the following information for the year just ended:
- Total sales revenue for the year was $930,000.
- Cash sales represent 20% of total sales.
- The accounts receivable balance at the beginning of the year was $102,000.
- The accounts receivable balance at the end of the year was $162,000.
- A review of the outstanding accounts receivable at the end of the year indicates that $8,100 should be written off.
- The industry uses the allowance approach based on 4% of accounts receivable or 1% of credit sales.
Prepare the necessary adjusting entry to record the bad debts expense assuming that Capilano Company uses the direct write-off approach.

Accepted Answer

The answer of Capilano Company has a July 31 year-end.You...

Question 5

Wasson Corp had the following items in its unadjusted trial balance at December 31:   Prepare the adjusting entry to estimate bad debts under each of the following independent situations.(Show all work.)
(1)Bad debts are estimated to be 8% of credit sales.
(2)An analysis shows that 8% of outstanding accounts receivable will not be collected.

Accepted Answer

The answer of Wasson Corp had the following items in...

Question 6

On June 18,2015,Woods Co.received from one of its customers,Webb Co.,a 90 day,12%,$12,000 note receivable,in exchange for contract services provided.Woods Co.has a March 31 year end.Webb Co.honoured the note at maturity.Prepare the entries for the issuance and the maturity of the note.

Accepted Answer

The answer of   On June 18,2015,Woods Co.received from...

Question 7

The direct write-off method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible.

Accepted Answer

A) True 
 B)False

Question 8

Companies must follow both the matching principle and the materiality principle when considering the use of the direct write-off method.

Accepted Answer

A) True 
 B)False

Question 9

A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and that is usually the most reliable is the:

Accepted Answer

A)  Direct write-off method. 
B)  Income statement method. 
C)  Aging of accounts receivable method. 
D)  Simplified balance sheet method. 
E)  Accounts receivable method. 
A)  Direct write-off method. 
B)  Income statement method. 
C)  Aging of accounts receivable method. 
D)  Simplified balance sheet method. 
E)  Accounts receivable method.

Question 10

Quality of receivables refers to the likelihood of collection without loss.

Accepted Answer

A) True 
 B)False

Question 11

The days' sales uncollected ratio measures a company's ability to manage its debt.

Accepted Answer

A) True 
 B)False

Question 12

A contingent liability is an obligation to make a future payment if an uncertain future event occurs.

Accepted Answer

A) True 
 B)False

Question 13

Quality of receivables refers to:

Accepted Answer

A)  The creditworthiness of the customers. 
B)  The speed of collection. 
C)  The likelihood of collection. 
D)  Sales turnover. 
E)  The speed and likelihood of collection. 
A)  The creditworthiness of the customers. 
B)  The speed of collection. 
C)  The likelihood of collection. 
D)  Sales turnover. 
E)  The speed and likelihood of collection.

Question 14

Accounts receivable arise from credit sales to customers by both retailers and wholesalers.

Accepted Answer

A) True 
 B)False

Question 15

The days' sales uncollected ratio is used to:

Accepted Answer

A)  Measure how many days of sales remain until the end of the year. 
B)  Determine the number of days that have passed without collecting on accounts receivable. 
C)  Identify the likelihood of collecting sales on account. 
D)  Estimate how much time is likely to pass before cash receipts from credit sales equal the current amount of accounts receivable. 
E)  Measure the amount of layaway sales for a period. 
A)  Measure how many days of sales remain until the end of the year. 
B)  Determine the number of days that have passed without collecting on accounts receivable. 
C)  Identify the likelihood of collecting sales on account. 
D)  Estimate how much time is likely to pass before cash receipts from credit sales equal the current amount of accounts receivable. 
E)  Measure the amount of layaway sales for a period.

Question 16

Firms maintain their own credit cards:

Accepted Answer

A)  To earn interest on any balances not paid within a specified period. 
B)  To avoid the fees charged by credit card companies such as VISA. 
C)  In order to speed up receipt of cash from the sale. 
D)  To grant credit to approved customers. 
E)  All of these answers are correct. 
A)  To earn interest on any balances not paid within a specified period. 
B)  To avoid the fees charged by credit card companies such as VISA. 
C)  In order to speed up receipt of cash from the sale. 
D)  To grant credit to approved customers. 
E)  All of these answers are correct.

Question 17

Credit sales are recorded by crediting an account receivable for a specific customer.

Accepted Answer

A) True 
 B)False

Question 18

Augusto Diaz borrowed $1,000 and signed a 6-month promissory note at 11% interest.The total amount of interest is $110.00.

Accepted Answer

A) True 
 B)False

Question 19

The ____________________________ ratio measures the liquidity of receivables.

Accepted Answer

accounts r

Question 20

The direct write-off method satisfies generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Compaq had net sales of $10,500 million.Its average account receivables were $1,750 million.Its accounts receivable turnover was 6.

As long as a company accurately records credit sales information,it is not necessary to have accounts for specific customers.

When a maker of a note honours a note:

On June 18,2015,Woods Co.received from one of its customers,Webb Co.,a 90 day,12%,$12,000 note receivable,in exchange for contract services provided.Woods Co.has a March 31 year end.Webb Co.honoured the note at maturity.Prepare the entries for the issuance and the maturity of the note.

The direct write-off method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible.

Companies must follow both the matching principle and the materiality principle when considering the use of the direct write-off method.

A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and that is usually the most reliable is the:

Quality of receivables refers to the likelihood of collection without loss.

The days' sales uncollected ratio measures a company's ability to manage its debt.

A contingent liability is an obligation to make a future payment if an uncertain future event occurs.

Quality of receivables refers to:

Accounts receivable arise from credit sales to customers by both retailers and wholesalers.

The days' sales uncollected ratio is used to:

Firms maintain their own credit cards:

Credit sales are recorded by crediting an account receivable for a specific customer.

Augusto Diaz borrowed $1,000 and signed a 6-month promissory note at 11% interest.The total amount of interest is $110.00.

The ____________________________ ratio measures the liquidity of receivables.

The direct write-off method satisfies generally accepted accounting principles.

Accounting in Business

Analyzing and Reporting Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Merchandise Inventory and Cost of Sales

Accounting Information Systems

Internal Control and Cash

Filters

Exam 9: Receivables

Compaq had net sales of $10,500 million.Its average account receivables were $1,750 million.Its accounts receivable turnover was 6.

As long as a company accurately records credit sales information,it is not necessary to have accounts for specific customers.

When a maker of a note honours a note:

On June 18,2015,Woods Co.received from one of its customers,Webb Co.,a 90 day,12%,$12,000 note receivable,in exchange for contract services provided.Woods Co.has a March 31 year end.Webb Co.honoured the note at maturity.Prepare the entries for the issuance and the maturity of the note.

The direct write-off method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible.

Companies must follow both the matching principle and the materiality principle when considering the use of the direct write-off method.

A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and that is usually the most reliable is the:

Quality of receivables refers to the likelihood of collection without loss.

The days' sales uncollected ratio measures a company's ability to manage its debt.

A contingent liability is an obligation to make a future payment if an uncertain future event occurs.

Quality of receivables refers to:

Accounts receivable arise from credit sales to customers by both retailers and wholesalers.

The days' sales uncollected ratio is used to:

Firms maintain their own credit cards:

Credit sales are recorded by crediting an account receivable for a specific customer.

Augusto Diaz borrowed $1,000 and signed a 6-month promissory note at 11% interest.The total amount of interest is $110.00.

The ____________________________ ratio measures the liquidity of receivables.

The direct write-off method satisfies generally accepted accounting principles.

Accounting in Business

Analyzing and Reporting Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Merchandise Inventory and Cost of Sales

Accounting Information Systems

Internal Control and Cash

Filters