Question 1

Accounts receivable are the result of cash and credit sales.

Accepted Answer

A) True 
 B)False

Question 2

Young Company lends Dobson industries $40,000 on August 1, 2017, accepting a 9-month, 9% interest note. If Young accrued interest at its December 31, 2017 year-end, what entry must it make to record the collection of the note and interest at its maturity date?

Accepted Answer

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

Question 3

Which board(s) has(have) worked to implement fair value measurement for financial instruments?

Accepted Answer

A) FASB, but not IASB. 
B) IASB, but not FASB. 
C) both FASB and IASB. 
D) neither FASB nor IASB. 
A) FASB, but not IASB. 
B) IASB, but not FASB. 
C) both FASB and IASB. 
D) neither FASB nor IASB.

Question 4

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. 
A) cash realizable value. 
B) cash-good value. 
C) gross cash value. 
D) cash-equivalent value.

Question 5

The maturity value of a $10,000, 6%, 60-day note receivable dated February 10th is

Accepted Answer

A) $10,100. 
B) $10,050. 
C) $10,000. 
D) $10,600. 
A) $10,100. 
B) $10,050. 
C) $10,000. 
D) $10,600.

Question 6

If a promissory note is dishonored, the payee should not record interest income.

Accepted Answer

A) True 
 B)False

Question 7

If the amount of uncollectible account expense is understated at year end

Accepted Answer

A) net income will be understated. 
B) stockholders' equity will be understated. 
C) Allowance for Doubtful accounts will be overstated. 
D) net Accounts Receivable will be overstated. 
A) net income will be understated. 
B) stockholders' equity will be understated. 
C) Allowance for Doubtful accounts will be overstated. 
D) net Accounts Receivable will be overstated.

Question 8

If a company uses the allowance method to account for uncollectible accounts, the entry to write off an uncollectible account only involves balance sheet accounts.

Accepted Answer

A) True 
 B)False

Question 9

In computing the maturity date of a note, the date the note is issued is included but the due date is omitted.

Accepted Answer

A) True 
 B)False

Question 10

On April 5 Donna's Boutique accepted a Visa card for a $750 purchase. Visa charges a 2% service fee. The entry to record this transaction would include a

Accepted Answer

A) credit to Cash of $735. 
B) debit to Cash of $750. 
C) debit to Service Charge Expense of $15. 
D) credit to Service Charge Expense of $15. 
A) credit to Cash of $735. 
B) debit to Cash of $750. 
C) debit to Service Charge Expense of $15. 
D) credit to Service Charge Expense of $15.

Question 11

The average collection period is frequently used to assess the effectiveness of a company's credit and collection policies.

Accepted Answer

A) True 
 B)False

Question 12

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 deducted from accounts receivable. 
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 deducted from accounts receivable.

Question 13

When the allowance method of accounting for uncollectible accounts is used, Bad Debt Expense is recorded

Accepted Answer

A) in the year after the credit sale is made. 
B) in the same year as the credit sale. 
C) as each credit sale is made. 
D) when an account is written off as uncollectible. 
A) in the year after the credit sale is made. 
B) in the same year as the credit sale. 
C) as each credit sale is made. 
D) when an account is written off as uncollectible.

Question 14

The retailer considers Visa and MasterCard sales as

Accepted Answer

A) cash sales. 
B) promissory sales. 
C) credit sales. 
D) contingent sales. 
A) cash sales. 
B) promissory sales. 
C) credit sales. 
D) contingent sales.

Question 15

Doane Company receives a $10,000, 3-month, 6% promissory note from Ray Company in settlement of an open accounts receivable. What entry will Doane Company make upon receiving the note?

Accepted Answer

The answer of Doane Company receives a $10,000, 3-month, 6%...

Question 16

The direct write-off method of recognizing uncollectible accounts is not in accordance with good accounting practice.

Accepted Answer

A) True 
 B)False

Question 17

Under the accounts receivable aging method, the balance in Allowance for Doubtful Accounts must be considered carefully prior to adjusting for estimated uncollectible accounts.

Accepted Answer

A) True 
 B)False

Question 18

Bad Debt Expense is considered

Accepted Answer

A) an avoidable cost in doing business on a credit basis. 
B) an internal control weakness. 
C) a necessary risk of doing business on a credit basis. 
D) avoidable unless there is a recession. 
A) an avoidable cost in doing business on a credit basis. 
B) an internal control weakness. 
C) a necessary risk of doing business on a credit basis. 
D) avoidable unless there is a recession.

Question 19

If a retailer regularly sells its receivables to a factor, the service charge of the factor should be classified as a(n)

Accepted Answer

A) selling expense. 
B) interest expense. 
C) other expense. 
D) contra asset. 
A) selling expense. 
B) interest expense. 
C) other expense. 
D) contra asset.

Question 20

The accounts receivable turnover is used to analyze

Accepted Answer

A) profitability. 
B) liquidity. 
C) risk. 
D) long-term solvency. 
A) profitability. 
B) liquidity. 
C) risk. 
D) long-term solvency.

Exam 7: Reporting and Analyzing Receivables

Accounts receivable are the result of cash and credit sales.

Young Company lends Dobson industries $40,000 on August 1, 2017, accepting a 9-month, 9% interest note. If Young accrued interest at its December 31, 2017 year-end, what entry must it make to record the collection of the note and interest at its maturity date?

Which board(s) has(have) worked to implement fair value measurement for financial instruments?

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

The maturity value of a $10,000, 6%, 60-day note receivable dated February 10th is

If a promissory note is dishonored, the payee should not record interest income.

If the amount of uncollectible account expense is understated at year end

If a company uses the allowance method to account for uncollectible accounts, the entry to write off an uncollectible account only involves balance sheet accounts.

In computing the maturity date of a note, the date the note is issued is included but the due date is omitted.

On April 5 Donna's Boutique accepted a Visa card for a $750 purchase. Visa charges a 2% service fee. The entry to record this transaction would include a

The average collection period is frequently used to assess the effectiveness of a company's credit and collection policies.

Allowance for Doubtful Accounts on the balance sheet

When the allowance method of accounting for uncollectible accounts is used, Bad Debt Expense is recorded

The retailer considers Visa and MasterCard sales as

Doane Company receives a $10,000, 3-month, 6% promissory note from Ray Company in settlement of an open accounts receivable. What entry will Doane Company make upon receiving the note?

The direct write-off method of recognizing uncollectible accounts is not in accordance with good accounting practice.

Under the accounts receivable aging method, the balance in Allowance for Doubtful Accounts must be considered carefully prior to adjusting for estimated uncollectible accounts.

Bad Debt Expense is considered

If a retailer regularly sells its receivables to a factor, the service charge of the factor should be classified as a(n)

The accounts receivable turnover is used to analyze

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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