Question 1

Other receivables include nontrade receivables such as loans to company officers.

Accepted Answer

A) True 
 B)False

Question 2

When calculating interest on a promissory note with the maturity date stated in terms of days, the

Accepted Answer

A)  maker pays more interest if 365 days are used instead of 360.
B)  maker pays the same interest regardless if 365 or 360 days are used.
C)  payee receives more interest if 360 days are used instead of 365.
D)  payee receives less interest if 360 days are used instead of 365.E) A) and B)
F) B) and C)

Question 3

In 2015, Boyle Company had credit sales of $1,080,000 and granted sales discounts of $24,000. On January 1, 2015, Allowance for Doubtful Accounts had a credit balance of $26,400. During 2015, $45,000 of uncollectible accounts receivable were written off. Past experience indicates that 3% of net credit sales become uncollectible. What should be the adjusted balance of Allowance for Doubtful Accounts at December 31, 2015?

Accepted Answer

A)  $13,080
B)  $13,800
C)  $31,680
D)  $39,720E) C) and D)
F) A) and B)

Question 4

The financial statements of Danielle Manufacturing Company report net sales of $750,000 and accounts receivable of $60,000 and $90,000 at the beginning and end of the year, respectively. What is the accounts receivable turnover for Danielle?

Accepted Answer

A)  5 times
B)  8.3 times
C)  10 times
D)  12.5 timesE) A) and D)
F) B) and D)

Question 5

Interest is usually associated with

Accepted Answer

A)  accounts receivable.
B)  notes receivable.
C)  doubtful accounts.
D)  bad debts.E) C) and D)
F) B) and C)

Question 6

An aging schedule is prepared only for old accounts receivables that have been past due for more than one year.

Accepted Answer

A) True 
 B)False

Question 7

A 60-day note receivable dated July 13 has a maturity date of

Accepted Answer

A)  September 12.
B)  September 11.
C)  September 10.
D)  September 13.E) A) and D)
F) B) and D)

Question 8

The direct write-off method of accounting for bad debts

Accepted Answer

A)  uses an allowance account.
B)  uses a contra-asset account.
C)  does not require estimates of bad debt losses.
D)  is the preferred method under generally accepted accounting principles.E) A) and C)
F) A) and B)

Question 9

When an account is written off using the allowance method, accounts receivable

Accepted Answer

A)  is unchanged and the allowance account increases.
B)  increases and the allowance account increases.
C)  decreases and the allowance account decreases.
D)  decreases and the allowance account increases.E) A) and D)
F) A) and B)

Question 10

Jeff Retailers accepted $75,000 of Citibank Visa credit card charges for merchandise sold on July 1. Citibank charges 2% for its credit card use. The entry to record this transaction by Jeff Retailers will include a credit to Sales Revenue of $75,000 and a debit(s)  to

Accepted Answer

A)  Cash $73,500 and Service Charge Expense $1,500.
B)  Accounts Receivable $73,500 and Service Charge Expense $1,500.
C)  Cash $73,500 and Interest Expense $1,500.
D)  Accounts Receivable $75,000.E) B) and C)
F) None of the above

Question 11

The entry to record the dishonor of a note receivable assuming the payee expects eventual collection includes a debit to

Accepted Answer

A)  Notes Receivable.
B)  Cash.
C)  Allowance for Doubtful Accounts.
D)  Accounts Receivable.E) None of the above
F) All of the above

Question 12

The percentage of sales basis of estimating expected uncollectibles

Accepted Answer

A)  emphasizes the matching of expenses with revenues.
B)  emphasizes balance sheet relationships.
C)  emphasizes cash realizable value.
D)  is not generally accepted as a basis for estimating bad debts.E) A) and C)
F) A) and B)

Question 13

The face value of a note refers to the amount

Accepted Answer

A)  that can be received if sold to a factor.
B)  borrowed plus interest received at maturity from the maker.
C)  that is identified on the formal instrument of credit.
D)  remaining after a service charge has been deducted.E) B) and C)
F) A) and C)

Question 14

The account Allowance for Doubtful Accounts is closed out at the end of the year.

Accepted Answer

A) True 
 B)False

Question 15

Allowance for Doubtful Accounts on the balance sheet

Accepted Answer

A)  is offset against total current assets.
B)  increases the cash realizable value of accounts receivable.
C)  appears under the heading "Other Assets."
D)  is offset against accounts receivable.E) A) and B)
F) A) and C)

Question 16

The net amount expected to be received in cash from receivables is termed the

Accepted Answer

A)  cash realizable value.
B)  cash-good value.
C)  gross cash value.
D)  cash-equivalent value.E) A) and C)
F) None of the above

Question 17

Claims for which formal instruments of credit are issued as proof of the debt are

Accepted Answer

A)  accounts receivable.
B)  interest receivable.
C)  notes receivable.
D)  other receivables.E) A) and C)
F) All of the above

Question 18

The sale of receivables by a business

Accepted Answer

A)  indicates that the business is in financial difficulty.
B)  is generally the major revenue item on its income statement.
C)  is an indication that the business is owned by a factor.
D)  can be a quick way to generate cash for operating needs.E) A) and B)
F) All of the above

Question 19

An aging of a company's accounts receivable indicates that $5,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $900 credit balance, the adjustment to record bad debts for the period will require a

Accepted Answer

A)  debit to Bad Debt Expense for $5,000.
B)  debit to Allowance for Doubtful Accounts for $4,100.
C)  debit to Bad Debt Expense for $4,100.
D)  credit to Allowance for Doubtful Accounts for $5,000.E) A) and B)
F) None of the above

Question 20

Two bases for estimating uncollectible accounts are:

Accepted Answer

A)  percentage of assets and percentage of sales.
B)  percentage of receivables and percentage of total revenue.
C)  percentage of current assets and percentage of sales.
D)  percentage of receivables and percentage of sales.E) A) and D)
F) B) and C)

Exam 8: Accounting for Receivables

Two bases for estimating uncollectible accounts are:

Correct Answer
verified

Interest is usually associated with

Correct Answer
verified

Correct Answer
verified

When calculating interest on a promissory note with the maturity date stated in terms of days, the

Correct Answer
verified

A 60-day note receivable dated July 13 has a maturity date of

Correct Answer
verified

The financial statements of Danielle Manufacturing Company report net sales of $750,000 and accounts receivable of $60,000 and $90,000 at the beginning and end of the year, respectively. What is the accounts receivable turnover for Danielle?

Correct Answer
verified

Claims for which formal instruments of credit are issued as proof of the debt are

Correct Answer
verified

An aging schedule is prepared only for old accounts receivables that have been past due for more than one year.

Correct Answer
verified

The account Allowance for Doubtful Accounts is closed out at the end of the year.

Correct Answer
verified

Other receivables include nontrade receivables such as loans to company officers.

Correct Answer
verified

Allowance for Doubtful Accounts on the balance sheet

Correct Answer
verified

The entry to record the dishonor of a note receivable assuming the payee expects eventual collection includes a debit to

Correct Answer
verified

The direct write-off method of accounting for bad debts

Correct Answer
verified

The net amount expected to be received in cash from receivables is termed the

Correct Answer
verified

When an account is written off using the allowance method, accounts receivable

Correct Answer
verified

The percentage of sales basis of estimating expected uncollectibles

Correct Answer
verified

The sale of receivables by a business

Correct Answer
verified

An aging of a company's accounts receivable indicates that $5,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $900 credit balance, the adjustment to record bad debts for the period will require a

Correct Answer
verified

Jeff Retailers accepted $75,000 of Citibank Visa credit card charges for merchandise sold on July 1. Citibank charges 2% for its credit card use. The entry to record this transaction by Jeff Retailers will include a credit to Sales Revenue of $75,000 and a debit(s) to

Correct Answer
verified

The face value of a note refers to the amount

Correct Answer
verified

Exam 8: Accounting for Receivables

Two bases for estimating uncollectible accounts are:

Correct AnswerverifiedShow Answer

Interest is usually associated with

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When calculating interest on a promissory note with the maturity date stated in terms of days, the

Correct AnswerverifiedShow Answer

A 60-day note receivable dated July 13 has a maturity date of

Correct AnswerverifiedShow Answer

The financial statements of Danielle Manufacturing Company report net sales of $750,000 and accounts receivable of $60,000 and $90,000 at the beginning and end of the year, respectively. What is the accounts receivable turnover for Danielle?

Correct AnswerverifiedShow Answer

Claims for which formal instruments of credit are issued as proof of the debt are

Correct AnswerverifiedShow Answer

An aging schedule is prepared only for old accounts receivables that have been past due for more than one year.

Correct AnswerverifiedShow Answer

The account Allowance for Doubtful Accounts is closed out at the end of the year.

Correct AnswerverifiedShow Answer

Other receivables include nontrade receivables such as loans to company officers.

Correct AnswerverifiedShow Answer

Allowance for Doubtful Accounts on the balance sheet

Correct AnswerverifiedShow Answer

The entry to record the dishonor of a note receivable assuming the payee expects eventual collection includes a debit to

Correct AnswerverifiedShow Answer

The direct write-off method of accounting for bad debts

Correct AnswerverifiedShow Answer

The net amount expected to be received in cash from receivables is termed the

Correct AnswerverifiedShow Answer

When an account is written off using the allowance method, accounts receivable

Correct AnswerverifiedShow Answer

The percentage of sales basis of estimating expected uncollectibles

Correct AnswerverifiedShow Answer

The sale of receivables by a business

Correct AnswerverifiedShow Answer

An aging of a company's accounts receivable indicates that $5,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $900 credit balance, the adjustment to record bad debts for the period will require a

Correct AnswerverifiedShow Answer

Jeff Retailers accepted $75,000 of Citibank Visa credit card charges for merchandise sold on July 1. Citibank charges 2% for its credit card use. The entry to record this transaction by Jeff Retailers will include a credit to Sales Revenue of $75,000 and a debit(s) to

Correct AnswerverifiedShow Answer

The face value of a note refers to the amount

Correct AnswerverifiedShow Answer

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