Question 1

What is the accounts receivable turnover ratio and how do decision makers use it to evaluate companies?

Accepted Answer

The accounts receivable turnover ratio is net sales divided by average net accounts receivable.The ratio measures a company's ability to collect cash from its credit customers.This ratio is useful for decision makers because it can be used to determine whether a company has a history of collecting receivables in a timely manner.

Question 2

According to its August 31 bank statement,X Co's bank account held $10,000.Deposits in transit were $3,000; outstanding checks were $1,000; bank service charges were $10; and a customer's check for $50 was returned NSF.How much cash should X Co report on its August 31 balance sheet?

Accepted Answer

A)  $10,000
B)  $12,000
C)  $9,940
D)  $8,000 B

Question 3

Y Company obtained the following balances from its computerized accounting information system at the end of the year before adjustments:  The company estimates that 20% of accounts receivable will be uncollectible.After the correct adjusting entry has been made,the allowance for uncollectible accounts will be:

Accepted Answer

A)  $(2,400) .
B)  $(4,800) .
C)  $(5,400) .
D)  $(20,000) . C

Question 4

When Y Company later records the write-off of a specific customer's account receivable,its total assets will ________.

Accepted Answer

A)  increase
B)  decrease
C)  remain the same
D)  The answer cannot be determined from the information given.

Question 5

Ace Electronics accepted a promissory note from Fenstermaker,who promised to pay Ace $2,000 plus 6% interest at the end of six months.When Ace first accepts the note,it should record ________.

Accepted Answer

A)  a note payable of $2,000
B)  a note receivable of $2,000
C)  a note payable of $2,060
D)  a note receivable of $2,060

Question 6

Magic Cow Co.made a sale for $5,000 to a customer who paid with MasterCard.MasterCard charges Magic Cow a fee of 3% of sales.How much sales revenue will Magic Cow record?

Accepted Answer

A)  $5,000
B)  $4,850
C)  $150
D)  $5,150

Question 7

Discuss the importance of reporting net accounts receivable.

Accepted Answer

The answer of Discuss the importance of reporting net accounts...

Question 8

The allowance method is preferred over the direct write-off method because it better matches the expense of bad debts in the same period as the related sale.

Accepted Answer

A) True 
 B)False

Question 9

The Allowance for uncollectible accounts appears on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 10

Cash and cash equivalents are found on both the balance sheet and the statement of cash flows

Accepted Answer

A) True 
 B)False

Question 11

The accounts receivable turnover ratio measures a company's ability to ________.

Accepted Answer

A)  make credit sales
B)  collect the cash owed from its credit customers
C)  increase its credit customer base
D)  convert accounts receivable to notes receivable

Question 12

Y Company obtained the following balances from its computerized accounting information system at the end of the year before adjustments:  The company estimates that 20% of accounts receivable will be uncollectible.After the correct adjusting entry has been made,the allowance for uncollectible accounts will be:

Accepted Answer

A)  $(2,400) .
B)  $(4,800) .
C)  $(5,400) .
D)  $(20,000) .

Question 13

Team Instructions: Divide the class into teams of three or four people.Each team member should work the following problem separately outside of class.Then give the students time in class to compare answers with their teammates and put together a final correct copy of the problem.Each team should turn in only one copy of the problem for grading,along with the annual report used.All team members will receive the same grade.
Provide students with copies of real merchandising companies' annual reports,or give students the Web addresses of real merchandising companies and ask them to print out the annual reports.All team members should work with the same company's annual report.
Answer the following questions using the annual report assigned to your team:
Part A: Complete the following chart:
  Part B: Is the company's estimate of uncollectible accounts increasing or decreasing?
Part C: Why might a company's estimate of uncollectible accounts change?

Accepted Answer

The answer of Team Instructions: Divide the class into teams...

Question 14

Comparing a company's cash balance in its accounting records with the bank statement is called ________.

Accepted Answer

A)  a bank reconciliation
B)  an external audit
C)  an internal audit
D)  adjusting the books

Question 15

Which financial statement shows Bad debts expense?

Accepted Answer

A)  Income statement
B)  Balance sheet
C)  Statement of cash flows
D)  both the Income statement and the Balance sheet

Question 16

Y Company obtained the following balances from its computerized accounting information system at the end of the year before adjustments:  The company estimates that 2% of net sales will be uncollectible.After the correct adjusting entry has been made,what is the net accounts receivable on the year-end balance sheet?

Accepted Answer

A)  This is a trick question.Accounts receivable appear on the income statement,not the balance sheet.
B)  $24,000
C)  $25,300
D)  $27,000

Question 17

First Bank charged Team Shirts $100 in services charges for September.On the bank reconciliation,the $100 should be ________.

Accepted Answer

A)  added to the balance per books
B)  deducted from the balance per books
C)  added to the balance per bank statement
D)  deducted from the balance per bank statement

Question 18

Team Shirts made a deposit of $150 on March 31 to its account at First Bank.The deposit did not appear on the March bank statement.On its bank reconciliation,Team Shirts should ________.

Accepted Answer

A)  add $150 to the Team Shirts' balance per books
B)  subtract $150 from the Team Shirts' balance per books
C)  add $150 to the balance per bank statement
D)  subtract $150 from the balance per bank statement

Question 19

Z Company obtained the following balances from its computerized accounting information system at the end of the year before adjustments:  The company estimates that 2% of net sales will be uncollectible.After the correct adjusting entry has been made,the allowance for uncollectible accounts will be:

Accepted Answer

A)  $(1,000) .
B)  $(3,000) .
C)  $(4,000) .
D)  $(5,000) .

Question 20

Team Shirts had a balance in its allowance for uncollectible accounts of $(200).Aging the accounts receivable showed that the allowance should be $(1,800).Bad debts expense should be ________.

Accepted Answer

A)  $1,400
B)  $1,600
C)  $1,800
D)  $2,000

Exam 4: Payment for Goods and Services: Cash and Accounts Receivable

What is the accounts receivable turnover ratio and how do decision makers use it to evaluate companies?

According to its August 31 bank statement,X Co's bank account held $10,000.Deposits in transit were $3,000; outstanding checks were $1,000; bank service charges were $10; and a customer's check for $50 was returned NSF.How much cash should X Co report on its August 31 balance sheet?

When Y Company later records the write-off of a specific customer's account receivable,its total assets will ________.

Ace Electronics accepted a promissory note from Fenstermaker,who promised to pay Ace $2,000 plus 6% interest at the end of six months.When Ace first accepts the note,it should record ________.

Magic Cow Co.made a sale for $5,000 to a customer who paid with MasterCard.MasterCard charges Magic Cow a fee of 3% of sales.How much sales revenue will Magic Cow record?

Discuss the importance of reporting net accounts receivable.

The allowance method is preferred over the direct write-off method because it better matches the expense of bad debts in the same period as the related sale.

The Allowance for uncollectible accounts appears on the balance sheet.

Cash and cash equivalents are found on both the balance sheet and the statement of cash flows

The accounts receivable turnover ratio measures a company's ability to ________.

Comparing a company's cash balance in its accounting records with the bank statement is called ________.

Which financial statement shows Bad debts expense?

First Bank charged Team Shirts $100 in services charges for September.On the bank reconciliation,the $100 should be ________.

Team Shirts made a deposit of $150 on March 31 to its account at First Bank.The deposit did not appear on the March bank statement.On its bank reconciliation,Team Shirts should ________.

Z Company obtained the following balances from its computerized accounting information system at the end of the year before adjustments: The company estimates that 2% of net sales will be uncollectible.After the correct adjusting entry has been made,the allowance for uncollectible accounts will be:

Team Shirts had a balance in its allowance for uncollectible accounts of $(200) .Aging the accounts receivable showed that the allowance should be $(1,800) .Bad debts expense should be ________.