Question 1

Both the gross amount of receivables and the allowance for doubtful accounts should be reported in the balance sheet.

Accepted Answer

A) True 
 B)False

Question 2

Net credit sales for the month are $900,000. The accounts receivable balance is $192,000. The allowance is calculated as 5% of the receivables balance using the percentage-of-receivables basis. If the Allowance for Doubtful Accounts has a credit balance of $6,000 before adjustment, what is the balance after adjustment?

Accepted Answer

A) $ 9,600 
B) $ 3,600 
C) $15,600 
D) $ 9,900 
A) $ 9,600 
B) $ 3,600 
C) $15,600 
D) $ 9,900

Question 3

Nichols Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $250,000 and credit sales are $1,000,000. Management estimates that 4% of accounts receivable will be uncollectible. What adjusting entry will Nichols Company make if the Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment?

Accepted Answer

The answer of Nichols Company uses the percentage of receivables...

Question 4

Receivables might be sold to

Accepted Answer

A) lengthen the cash-to-cash operating cycle. 
B) take advantage of deep discounts on the cash realizable value of receivables. 
C) generate cash quickly. 
D) finance companies at an amount greater than cash realizable value. 
A) lengthen the cash-to-cash operating cycle. 
B) take advantage of deep discounts on the cash realizable value of receivables. 
C) generate cash quickly. 
D) finance companies at an amount greater than cash realizable value.

Question 5

Barber Company lends Monroe Company $40,000 on April 1, accepting a four-month, 6% interest note. Barber Company prepares financial statements on April 30. What adjusting entry should be made before the financial statements can be prepared? a.$\begin{array}{c}
\text { Note Receivable } &40,000\
\text { Cash }&&40,000
\end{array}$

b.$\begin{array}{c}
\text {Interest Receivable } &200\
\text { Interest Revenue }&&200
\end{array}$

c.$\begin{array}{c}
\text {Cash } &200\
\text { Interest Revenue }&&200
\end{array}$

d.$\begin{array}{c}
\text {Interest Receivable } &600\
\text { Interest Revenue }&&600
\end{array}$

Accepted Answer

The answer of Barber Company lends Monroe Company $40,000 on...

Question 6

Which board(s) has(have) faced bitter opposition when working 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 7

Allowance for Doubtful Accounts is a contra account that is deducted from Accounts Receivable on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is least likely to help a company minimize losses as credit standards are relaxed?

Accepted Answer

A) Require potential customers to provide bank guarantees. 
B) Ask a potential customer for references regarding payment history. 
C) Increase the estimate of uncollectible accounts at the end of each period. 
D) Check a potential customer's credit rating. 
A) Require potential customers to provide bank guarantees. 
B) Ask a potential customer for references regarding payment history. 
C) Increase the estimate of uncollectible accounts at the end of each period. 
D) Check a potential customer's credit rating.

Question 9

The percentage of receivables basis for estimating uncollectible accounts emphasizes

Accepted Answer

A) cash realizable value. 
B) the relationship between accounts receivable and bad debts expense. 
C) income statement relationships. 
D) the relationship between sales and accounts receivable. 
A) cash realizable value. 
B) the relationship between accounts receivable and bad debts expense. 
C) income statement relationships. 
D) the relationship between sales and accounts receivable.

Question 10

When customers make purchases with a national credit card, the retailer

Accepted Answer

A) is responsible for maintaining customer accounts. 
B) is not involved in the collection process. 
C) absorbs any losses from uncollectible accounts. 
D) receives cash equal to the full price of the merchandise sold from the credit card company. 
A) is responsible for maintaining customer accounts. 
B) is not involved in the collection process. 
C) absorbs any losses from uncollectible accounts. 
D) receives cash equal to the full price of the merchandise sold from the credit card company.

Question 11

Bad debt losses are a cost of selling on credit.

Accepted Answer

A) True 
 B)False

Question 12

The interest on a $15,000, 6%, 60-day note receivable is

Accepted Answer

A) $75. 
B) $900 
C) $450. 
D) $150. 
A) $75. 
B) $900 
C) $450. 
D) $150.

Question 13

The accounts receivable turnover is needed to calculate

Accepted Answer

A) the average collection period in days. 
B) market risk. 
C) return on assets. 
D) current ratio. 
A) the average collection period in days. 
B) market risk. 
C) return on assets. 
D) current ratio.

Question 14

Using the allowance method, the uncollectible accounts for the year are estimated to be $50,000. If the balance for the Allowance for Doubtful Accounts is a $9,000 credit before adjustment, what is the balance after adjustment?

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 15

Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible.

Accepted Answer

A) True 
 B)False

Question 16

Douglas Company has a $60,000 note that carries an annual interest rate of 10%. If the amount of the total interest on the note is equal to $4,500, then what is the duration of the note in months?

Accepted Answer

A) 6 months 
B) 4 months 
C) 12 months 
D) 9 months 
A) 6 months 
B) 4 months 
C) 12 months 
D) 9 months

Question 17

Kinsler Company uses the percentage-of-receivables method for recording bad debt expense. The Accounts Receivable balance is $250,000 and credit sales are $1,000,000. Management estimates that 6% of accounts receivable will be uncollectible. What adjusting entry will Kinsler Company make if the Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment?

Accepted Answer

The answer of Kinsler Company uses the percentage-of-receivables method for...

Question 18

A company sells $800,000 of accounts receivable to a factor for cash less a 2% service charge. The entry to record the sale should not include a

Accepted Answer

A) debit to Interest Expense for $16,000. 
B) debit to Cash for $784,000. 
C) debit to Service Charge Expense for $16,000. 
D) credit to Accounts Receivable for $800,000. 
A) debit to Interest Expense for $16,000. 
B) debit to Cash for $784,000. 
C) debit to Service Charge Expense for $16,000. 
D) credit to Accounts Receivable for $800,000.

Question 19

The expense recognition principle relates to credit losses by stating that bad debt expense should be recorded

Accepted Answer

A) in the same period as allowed for tax purposes. 
B) in the period of the sale. 
C) for an exact amount. 
D) in the period of the loss. 
A) in the same period as allowed for tax purposes. 
B) in the period of the sale. 
C) for an exact amount. 
D) in the period of the loss.

Question 20

An aging of a company's accounts receivable indicates that $9,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $3,200 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 $5,800. 
C) debit to Bad Debt Expense for $5,800. 
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 $5,800. 
C) debit to Bad Debt Expense for $5,800. 
D) credit to Allowance for Doubtful Accounts for $9,000.

Both the gross amount of receivables and the allowance for doubtful accounts should be reported in the balance sheet.

Receivables might be sold to

Which board(s) has(have) faced bitter opposition when working to implement fair value measurement for financial instruments?

Allowance for Doubtful Accounts is a contra account that is deducted from Accounts Receivable on the balance sheet.

Which of the following is least likely to help a company minimize losses as credit standards are relaxed?

The percentage of receivables basis for estimating uncollectible accounts emphasizes

When customers make purchases with a national credit card, the retailer

Bad debt losses are a cost of selling on credit.

The interest on a $15,000, 6%, 60-day note receivable is

The accounts receivable turnover is needed to calculate

Using the allowance method, the uncollectible accounts for the year are estimated to be $50,000. If the balance for the Allowance for Doubtful Accounts is a $9,000 credit before adjustment, what is the balance after adjustment?

Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible.

Douglas Company has a $60,000 note that carries an annual interest rate of 10%. If the amount of the total interest on the note is equal to $4,500, then what is the duration of the note in months?

A company sells $800,000 of accounts receivable to a factor for cash less a 2% service charge. The entry to record the sale should not include a

The expense recognition principle relates to credit losses by stating that bad debt expense should be recorded

An aging of a company's accounts receivable indicates that $9,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $3,200 credit balance, the adjustment to record bad debts for the period will require a

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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Exam 7: Reporting and Analyzing Receivables

Both the gross amount of receivables and the allowance for doubtful accounts should be reported in the balance sheet.

Receivables might be sold to

Which board(s) has(have) faced bitter opposition when working to implement fair value measurement for financial instruments?

Allowance for Doubtful Accounts is a contra account that is deducted from Accounts Receivable on the balance sheet.

Which of the following is least likely to help a company minimize losses as credit standards are relaxed?

The percentage of receivables basis for estimating uncollectible accounts emphasizes

When customers make purchases with a national credit card, the retailer

Bad debt losses are a cost of selling on credit.

The interest on a $15,000, 6%, 60-day note receivable is

The accounts receivable turnover is needed to calculate

Using the allowance method, the uncollectible accounts for the year are estimated to be $50,000. If the balance for the Allowance for Doubtful Accounts is a $9,000 credit before adjustment, what is the balance after adjustment?

Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible.

Douglas Company has a $60,000 note that carries an annual interest rate of 10%. If the amount of the total interest on the note is equal to $4,500, then what is the duration of the note in months?

A company sells $800,000 of accounts receivable to a factor for cash less a 2% service charge. The entry to record the sale should not include a

The expense recognition principle relates to credit losses by stating that bad debt expense should be recorded

An aging of a company's accounts receivable indicates that $9,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $3,200 credit balance, the adjustment to record bad debts for the period will require a

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