Question 1

Under the allowance method, writing off an uncollectible account

Accepted Answer

A) affects only balance sheet accounts. 
B) affects both balance sheet and income statement accounts. 
C) affects only income statement accounts. 
D) is not acceptable practice. 
A) affects only balance sheet accounts. 
B) affects both balance sheet and income statement accounts. 
C) affects only income statement accounts. 
D) is not acceptable practice.

Question 2

The interest on a $20,000, 6%, 60-day note receivable is

Accepted Answer

A) $1,200. 
B) $200. 
C) $400. 
D) $600. 
A) $1,200. 
B) $200. 
C) $400. 
D) $600.

Question 3

The financial statements of the Melton Manufacturing Company reports net sales of $360,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days?

Accepted Answer

A) 81.1 
B) 40.6 
C) 50.7 
D) 30.4 
A) 81.1 
B) 40.6 
C) 50.7 
D) 30.4

Question 4

If a company fails to record estimated bad debts expense,

Accepted Answer

A) cash realizable value is understated. 
B) expenses are understated. 
C) revenues are understated. 
D) receivables are understated. 
A) cash realizable value is understated. 
B) expenses are understated. 
C) revenues are understated. 
D) receivables are understated.

Question 5

Three accounting issues associated with accounts receivable are

Accepted Answer

A) depreciating, returns, and valuing. 
B) depreciating, valuing, and collecting. 
C) recognizing, valuing, and accelerating collections. 
D) accrual, bad debts, and accelerating collections. 
A) depreciating, returns, and valuing. 
B) depreciating, valuing, and collecting. 
C) recognizing, valuing, and accelerating collections. 
D) accrual, bad debts, and accelerating collections.

Question 6

The interest on a $15,000, 6%, 90-day note receivable is

Accepted Answer

A) $900. 
B) $450. 
C) $225. 
D) $675. 
A) $900. 
B) $450. 
C) $225. 
D) $675.

Question 7

Which of the following is a way of disposing of a note receivable?

Accepted Answer

A) Honoring it on maturity date. 
B) Selling it to receive cash before the maturity date. 
C) Default by the maker. 
D) All of these are ways to dispose of notes receivable. 
A) Honoring it on maturity date. 
B) Selling it to receive cash before the maturity date. 
C) Default by the maker. 
D) All of these are ways to dispose of notes receivable.

Question 8

Two methods of accounting for uncollectible accounts are the

Accepted Answer

A) allowance method and the accrual method. 
B) allowance method and the net realizable method. 
C) direct write-off method and the accrual method. 
D) direct write-off method and the allowance method. 
A) allowance method and the accrual method. 
B) allowance method and the net realizable method. 
C) direct write-off method and the accrual method. 
D) direct write-off method and the allowance method.

Question 9

Which is part of IFRS accounting for financial instruments?

Accepted Answer

The answer of Which is part of IFRS accounting for...

Question 10

The average collection period for receivables is computed by dividing 365 days by

Accepted Answer

A) net credit sales. 
B) average accounts receivable. 
C) ending accounts receivable. 
D) accounts receivable turnover. 
A) net credit sales. 
B) average accounts receivable. 
C) ending accounts receivable. 
D) accounts receivable turnover.

Question 11

There is only one way to calculate interest correctly.

Accepted Answer

A) True 
 B)False

Question 12

You have just received notice that a customer of yours with an account receivable balance of $100 has gone bankrupt and will not make any future payments. Assuming you use the allowance method, the entry you make is to

Accepted Answer

A) debit Allowance for Doubtful Accounts and credit Bad Debt Expense. 
B) debit Allowance for Doubtful Accounts and credit Accounts Receivable. 
C) debit Bad Debt Expense and credit Allowance for Doubtful Accounts. 
D) debit Bad Debt Expense and credit Accounts Receivable. 
A) debit Allowance for Doubtful Accounts and credit Bad Debt Expense. 
B) debit Allowance for Doubtful Accounts and credit Accounts Receivable. 
C) debit Bad Debt Expense and credit Allowance for Doubtful Accounts. 
D) debit Bad Debt Expense and credit Accounts Receivable.

Question 13

Ramos Company has a 90-day note that carries an annual interest rate of 8%. If the amount of the total interest on the note is equal to $900, then what is the principal of the note?

Accepted Answer

A) $11,250 
B) $45,000 
C) $64,800 
D) $28,800 
A) $11,250 
B) $45,000 
C) $64,800 
D) $28,800

Question 14

Which one of the following is not an accounting problem (issue) associated with accounts receivable?

Accepted Answer

A) Depreciating accounts receivable 
B) Recognizing accounts receivable 
C) Valuing accounts receivable 
D) Accelerating cash receipts from accounts receivable 
A) Depreciating accounts receivable 
B) Recognizing accounts receivable 
C) Valuing accounts receivable 
D) Accelerating cash receipts from accounts receivable

Question 15

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

Accepted Answer

A) $10,000. 
B) $1,000. 
C) $11,000. 
D) $10,900. 
A) $10,000. 
B) $1,000. 
C) $11,000. 
D) $10,900.

Question 16

The accounts receivable turnover is computed by dividing

Accepted Answer

A) total sales by average receivables. 
B) total sales by ending receivables. 
C) net credit sales by average receivables. 
D) net credit sales by ending receivables. 
A) total sales by average receivables. 
B) total sales by ending receivables. 
C) net credit sales by average receivables. 
D) net credit sales by ending receivables.

Question 17

All of the following statements are true regarding the average collection period except:

Accepted Answer

A) it is a popular variant of the accounts receivable turnover . 
B) it is used to assess the effectiveness of a company's credit and collection policies. 
C) it should generally exceed the credit term period. 
D) its increase may suggest a decline in the financial health of customers. 
A) it is a popular variant of the accounts receivable turnover . 
B) it is used to assess the effectiveness of a company's credit and collection policies. 
C) it should generally exceed the credit term period. 
D) its increase may suggest a decline in the financial health of customers.

Question 18

The maturity value of a $50,000, 12%, 3-month note receivable is

Accepted Answer

A) $51,500. 
B) $50,600. 
C) $56,000. 
D) $50,500. 
A) $51,500. 
B) $50,600. 
C) $56,000. 
D) $50,500.

Question 19

Carson Company on July 15 sells merchandise on account to Tayler Co. for $3,000, terms 2/10, n/30. On July 20, Tayler Co. returns merchandise worth $1,200 to Carson Company. On July 24, payment is received from Tayler Co. for the balance due. What is the amount of cash received?

Accepted Answer

A) $1,800 
B) $1,764 
C) $1,740 
D) $3,000 
A) $1,800 
B) $1,764 
C) $1,740 
D) $3,000

Question 20

The financial statements of the Belfry Manufacturing Company reports net sales of $600,000 and accounts receivable of $80,000 and $40,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days?

Accepted Answer

A) 24.3 times 
B) 73.0 times 
C) 36.5 times 
D) 48.7 times 
A) 24.3 times 
B) 73.0 times 
C) 36.5 times 
D) 48.7 times

Exam 7: Reporting and Analyzing Receivables

Under the allowance method, writing off an uncollectible account

The interest on a $20,000, 6%, 60-day note receivable is

The financial statements of the Melton Manufacturing Company reports net sales of $360,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days?

If a company fails to record estimated bad debts expense,

Three accounting issues associated with accounts receivable are

The interest on a $15,000, 6%, 90-day note receivable is

Which of the following is a way of disposing of a note receivable?

Two methods of accounting for uncollectible accounts are the

Which is part of IFRS accounting for financial instruments?

The average collection period for receivables is computed by dividing 365 days by

There is only one way to calculate interest correctly.

You have just received notice that a customer of yours with an account receivable balance of $100 has gone bankrupt and will not make any future payments. Assuming you use the allowance method, the entry you make is to

Ramos Company has a 90-day note that carries an annual interest rate of 8%. If the amount of the total interest on the note is equal to $900, then what is the principal of the note?

Which one of the following is not an accounting problem (issue) associated with accounts receivable?

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

The accounts receivable turnover is computed by dividing

All of the following statements are true regarding the average collection period except:

The maturity value of a $50,000, 12%, 3-month note receivable is

Carson Company on July 15 sells merchandise on account to Tayler Co. for $3,000, terms 2/10, n/30. On July 20, Tayler Co. returns merchandise worth $1,200 to Carson Company. On July 24, payment is received from Tayler Co. for the balance due. What is the amount of cash received?

The financial statements of the Belfry Manufacturing Company reports net sales of $600,000 and accounts receivable of $80,000 and $40,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days?

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