Question 1

What criteria are used to determine how to record a factoring transaction?

Accepted Answer

The answer of What criteria are used to determine how...

Question 2

Which permits partial derecognition of receivables?

Accepted Answer

The answer of Which permits partial derecognition of receivables? ...

Question 3

When using the allowance method bad debt expense is recorded when an individual customer defaults.

Accepted Answer

A) True 
 B)False

Question 4

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. 
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.

Question 5

An aging of a company's accounts receivable indicates that $9,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $2,400 credit balance, the adjustment to record bad debts for the period will require a

Accepted Answer

A) debit to Bad Debt Expense for $9,000. 
B) debit to Allowance for Doubtful Accounts for $6,600. 
C) debit to Bad Debt Expense for $6,600. 
D) credit to Allowance for Doubtful Accounts for $9,000. 
A) debit to Bad Debt Expense for $9,000. 
B) debit to Allowance for Doubtful Accounts for $6,600. 
C) debit to Bad Debt Expense for $6,600. 
D) credit to Allowance for Doubtful Accounts for $9,000.

Question 6

Receivables are valued and reported in the balance sheet at their gross amount less any sales returns and allowances and less any cash discounts.

Accepted Answer

A) True 
 B)False

Question 7

Trade receivables occur when two companies trade or exchange notes receivables.

Accepted Answer

A) True 
 B)False

Question 8

In reviewing the accounts receivable, the cash receivable value is $28,000 before the write-off of a $2,000 account. What is the cash receivable value after the write-off?

Accepted Answer

A) $28,000 
B) $2,000 
C) $30,000 
D) $26,000 
A) $28,000 
B) $2,000 
C) $30,000 
D) $26,000

Question 9

Young Company lends Dobson industries $40,000 on January 1, 2017, accepting a 9-month, 9% interest note. If Dobson dishonors the note and does not pay it in full at maturity but Young expects that it will eventually be able to collect the debt, which of the following entries should most likely be made by Young Company?

Accepted Answer

The answer of Young Company lends Dobson industries $40,000 on...

Question 10

Short-term notes receivable

Accepted Answer

A) have a related allowance account called Allowance for Doubtful Notes Receivable. 
B) are reported at their gross realizable value. 
C) use the same estimations and computations as accounts receivable to determine cash realizable value. 
D) present the same valuation problems as long-term notes receivables. 
A) have a related allowance account called Allowance for Doubtful Notes Receivable. 
B) are reported at their gross realizable value. 
C) use the same estimations and computations as accounts receivable to determine cash realizable value. 
D) present the same valuation problems as long-term notes receivables.

Question 11

Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $45,000. If the balance of the Allowance for Doubtful Accounts is $6,000 debit before adjustment, what is the balance after adjustment?

Accepted Answer

A) $45,000 
B) $51,000 
C) $39,000 
D) $6,000 
A) $45,000 
B) $51,000 
C) $39,000 
D) $6,000

Question 12

Gipson Furniture factors $700,000 of receivables to Kwik Factors, Inc. Kwik Factors assesses a 3% service charge on the amount of receivables sold. Gipson Furniture factors its receivables regularly with Kwik Factors. What journal entry does Gipson make when factoring these receivables?

Accepted Answer

The answer of Gipson Furniture factors $700,000 of receivables to...

Question 13

Interest on a 6-month, 10 percent, $10,000 note is calculated by multiplying $10,000 * 0.10 * 6/12.

Accepted Answer

A) True 
 B)False

Question 14

When using the direct write-off method year-end adjustments for bad debt expense must be made.

Accepted Answer

A) True 
 B)False

Question 15

Interest is usually associated with

Accepted Answer

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

Question 16

When a note is dishonored, the payee's entry includes a

Accepted Answer

A) debit to Interest Revenue. 
B) credit to Accounts Receivable. 
C) debit to Interest Expense. 
D) credit to Notes Receivable. 
A) debit to Interest Revenue. 
B) credit to Accounts Receivable. 
C) debit to Interest Expense. 
D) credit to Notes Receivable.

Question 17

When a note is written to settle an open account no entry is necessary.

Accepted Answer

A) True 
 B)False

Question 18

Selling accounts receivables to factors and allowing credit terms such as 2/10, n/30

Accepted Answer

A) represent common business practices. 
B) represent ways to accelerate receivables collections. 
C) result in collections that are less than the gross accounts receivable. 
D) All of these answer choices are correct. 
A) represent common business practices. 
B) represent ways to accelerate receivables collections. 
C) result in collections that are less than the gross accounts receivable. 
D) All of these answer choices are correct.

Question 19

Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $45,000. If the balance of the Allowance for Doubtful Accounts is $6,000 credit before adjustment, what is the amount of bad debt expense for that period?

Accepted Answer

A) $45,000 
B) $39,000 
C) $51,000 
D) $6,000 
A) $45,000 
B) $39,000 
C) $51,000 
D) $6,000

Question 20

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) at which the note receivable is recorded. 
D) remaining after a service charge has been deducted. 
A) that can be received if sold to a factor. 
B) borrowed plus interest received at maturity from the maker. 
C) at which the note receivable is recorded. 
D) remaining after a service charge has been deducted.

Exam 7: Reporting and Analyzing Receivables

What criteria are used to determine how to record a factoring transaction?

Which permits partial derecognition of receivables?

When using the allowance method bad debt expense is recorded when an individual customer defaults.

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

An aging of a company's accounts receivable indicates that $9,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $2,400 credit balance, the adjustment to record bad debts for the period will require a

Receivables are valued and reported in the balance sheet at their gross amount less any sales returns and allowances and less any cash discounts.

Trade receivables occur when two companies trade or exchange notes receivables.

In reviewing the accounts receivable, the cash receivable value is $28,000 before the write-off of a $2,000 account. What is the cash receivable value after the write-off?

Short-term notes receivable

Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $45,000. If the balance of the Allowance for Doubtful Accounts is $6,000 debit before adjustment, what is the balance after adjustment?

Gipson Furniture factors $700,000 of receivables to Kwik Factors, Inc. Kwik Factors assesses a 3% service charge on the amount of receivables sold. Gipson Furniture factors its receivables regularly with Kwik Factors. What journal entry does Gipson make when factoring these receivables?

Interest on a 6-month, 10 percent, $10,000 note is calculated by multiplying $10,000 * 0.10 * 6/12.

When using the direct write-off method year-end adjustments for bad debt expense must be made.

Interest is usually associated with

When a note is dishonored, the payee's entry includes a

When a note is written to settle an open account no entry is necessary.

Selling accounts receivables to factors and allowing credit terms such as 2/10, n/30

Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $45,000. If the balance of the Allowance for Doubtful Accounts is $6,000 credit before adjustment, what is the amount of bad debt expense for that period?

The face value of a note refers to the amount

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

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