Question 1

Both accounts receivable and notes receivable represent claims that are expected to be collected in cash.

Accepted Answer

A) True 
 B)False

Question 2

Simonic Retailers accepted $80,000 of Citibank Visa credit card charges for merchandise sold on July 1. Citibank charges 4% for its credit card use. The entry to record this transaction by Simonic Retailers will include a credit to Sales Revenue of $80,000 and a debit(s) to

Accepted Answer

A) Cash $76,800 and Service Charge Expense $3,200. 
B) Accounts Receivable $76,800 and Service Charge Expense $3,200. 
C) Cash $76,800 and Interest Expense $3,200. 
D) Accounts Receivable $80,000. 
A) Cash $76,800 and Service Charge Expense $3,200. 
B) Accounts Receivable $76,800 and Service Charge Expense $3,200. 
C) Cash $76,800 and Interest Expense $3,200. 
D) Accounts Receivable $80,000.

Question 3

Under the direct write-off method of accounting for uncollectible accounts, Bad Debt Expense is debited

Accepted Answer

A) when a credit sale is past due. 
B) at the end of each accounting period. 
C) whenever a pre-determined amount of credit sales have been made. 
D) when an account is determined to be uncollectible. 
A) when a credit sale is past due. 
B) at the end of each accounting period. 
C) whenever a pre-determined amount of credit sales have been made. 
D) when an account is determined to be uncollectible.

Question 4

Cash realizable value is determined by subtracting Allowance for Doubtful Accounts from Net Sales.

Accepted Answer

A) True 
 B)False

Question 5

Using the allowance method, the uncollectible accounts for the year is estimated to be $50,000. If the balance for the Allowance for Doubtful Accounts is a $9,000 credit before adjustment, what is the amount of bad debt expense for the period?

Accepted Answer

A) $9,000 
B) $41,000 
C) $50,000 
D) $59,000 
A) $9,000 
B) $41,000 
C) $50,000 
D) $59,000

Question 6

Notes or accounts receivables that result from sales transactions are often called

Accepted Answer

A) sales receivables. 
B) non-trade receivables. 
C) trade receivables. 
D) merchandise receivables. 
A) sales receivables. 
B) non-trade receivables. 
C) trade receivables. 
D) merchandise receivables.

Question 7

IFRS sometimes refers to allowances as

Accepted Answer

A) revenues. 
B) discounts. 
C) provisions. 
D) reserves. 
A) revenues. 
B) discounts. 
C) provisions. 
D) reserves.

Question 8

M. Cornett is a corporation that sells breakfast cereal. Based on the accounts listed below, what are M. Cornett's total trade receivables? $\begin{array}{lr}\text { Income tax refund due }&\$500\
\text { Advance due to the company from }\
\text { the company president }&300\
\text { 3-month note due from M. Cornett's main customer } & 2,000 \
\text { Interest due this month on the above note } & 100 \
\text { Due and unpaid from this month's sales } & 9,000 \
\text { Due and unpaid from last month's sales } & 1,000
\end{array}$

Accepted Answer

A) $10,000 
B) $12,000 
C) $11,000 
D) $12,900 
A) $10,000 
B) $12,000 
C) $11,000 
D) $12,900

Question 9

Under the direct write-off method of accounting for uncollectible accounts

Accepted Answer

A) the allowance account is increased for the actual amount of bad debt at the time of write-off. 
B) a specific account receivable is decreased for the actual amount of bad debt at the time of write-off. 
C) balance sheet relationships are emphasized. 
D) bad debt expense is always recorded in the period in which the revenue was recorded. 
A) the allowance account is increased for the actual amount of bad debt at the time of write-off. 
B) a specific account receivable is decreased for the actual amount of bad debt at the time of write-off. 
C) balance sheet relationships are emphasized. 
D) bad debt expense is always recorded in the period in which the revenue was recorded.

Question 10

The allowance method of handling bad debts violates the matching principle.

Accepted Answer

A) True 
 B)False

Question 11

Which receivables accounting and reporting issue is not essentially the same for IFRS and GAAP?

Accepted Answer

A) The use of allowance accounts and the allowance method. 
B) How to record discounts. 
C) How to record factoring. 
D) All of these answer choices are essentially the same for IFRS and GAAP. 
A) The use of allowance accounts and the allowance method. 
B) How to record discounts. 
C) How to record factoring. 
D) All of these answer choices are essentially the same for IFRS and GAAP.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Leary Corporation had net credit sales during the year of $1,200,000 and cost of goods sold of $720,000. The balance in accounts receivable at the beginning of the year was $120,000 and at the end of the year was $180,000. What was the accounts receivable turnover?

Accepted Answer

A) 8.0 
B) 10.0 
C) 6.7 
D) 4.8 
A) 8.0 
B) 10.0 
C) 6.7 
D) 4.8

Question 14

The interest on a $25,000, 10%, 1-year note receivable is

Accepted Answer

A) $250. 
B) $208. 
C) $2,500. 
D) $27,500. 
A) $250. 
B) $208. 
C) $2,500. 
D) $27,500.

Question 15

Nance Co. holds Gant Inc.'s $30,000, 120 day, 9% note. The entry made by Nance Co. when the note is collected, assuming no interest has previously been accrued is:

Accepted Answer

The answer of Nance Co. holds Gant Inc.'s $30,000, 120...

Question 16

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. 
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.

Question 17

The percentage of receivables basis of estimating uncollectible accounts ignores the existing balance in the allowance account when the bad debt adjusting entry is recorded.

Accepted Answer

A) True 
 B)False

Question 18

The two key parties to a note are the maker and the payee.

Accepted Answer

A) True 
 B)False

Question 19

The interest rate for a three-month loan would normally be stated in terms of which of the following rates of interest?

Accepted Answer

A) Daily 
B) Monthly 
C) Quarterly 
D) Annual 
A) Daily 
B) Monthly 
C) Quarterly 
D) Annual

Question 20

A write off of a specific accounts receivable under the allowance method

Accepted Answer

A) increases bad debt expense for the accounting period. 
B) should occur on the last day of the accounting period. 
C) decreases the cash realizable value of accounts receivable. 
D) should be formally approved by an authorized employee. 
A) increases bad debt expense for the accounting period. 
B) should occur on the last day of the accounting period. 
C) decreases the cash realizable value of accounts receivable. 
D) should be formally approved by an authorized employee.

Exam 7: Reporting and Analyzing Receivables

Both accounts receivable and notes receivable represent claims that are expected to be collected in cash.

Simonic Retailers accepted $80,000 of Citibank Visa credit card charges for merchandise sold on July 1. Citibank charges 4% for its credit card use. The entry to record this transaction by Simonic Retailers will include a credit to Sales Revenue of $80,000 and a debit(s) to

Under the direct write-off method of accounting for uncollectible accounts, Bad Debt Expense is debited

Cash realizable value is determined by subtracting Allowance for Doubtful Accounts from Net Sales.

Using the allowance method, the uncollectible accounts for the year is estimated to be $50,000. If the balance for the Allowance for Doubtful Accounts is a $9,000 credit before adjustment, what is the amount of bad debt expense for the period?

Notes or accounts receivables that result from sales transactions are often called

IFRS sometimes refers to allowances as

Under the direct write-off method of accounting for uncollectible accounts

The allowance method of handling bad debts violates the matching principle.

Which receivables accounting and reporting issue is not essentially the same for IFRS and GAAP?

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

Leary Corporation had net credit sales during the year of $1,200,000 and cost of goods sold of $720,000. The balance in accounts receivable at the beginning of the year was $120,000 and at the end of the year was $180,000. What was the accounts receivable turnover?

The interest on a $25,000, 10%, 1-year note receivable is

Nance Co. holds Gant Inc.'s $30,000, 120 day, 9% note. The entry made by Nance Co. when the note is collected, assuming no interest has previously been accrued is:

The direct write-off method of accounting for bad debts

The percentage of receivables basis of estimating uncollectible accounts ignores the existing balance in the allowance account when the bad debt adjusting entry is recorded.

The two key parties to a note are the maker and the payee.

The interest rate for a three-month loan would normally be stated in terms of which of the following rates of interest?

A write off of a specific accounts receivable under the allowance method

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

Filters