Question 1

Interest accrued on a note receivable is

Accepted Answer

A) credited to Notes Receivable. 
B) debited to Interest Revenue. 
C) credited to Interest Receivable. 
D) debited to Interest Receivable. 
A) credited to Notes Receivable. 
B) debited to Interest Revenue. 
C) credited to Interest Receivable. 
D) debited to Interest Receivable.

Question 2

When an account becomes uncollectible and must be written off

Accepted Answer

A) Allowance for Doubtful Accounts should be credited. 
B) Accounts Receivable should be credited. 
C) Bad Debts Expense should be credited. 
D) Sales should be debited. 
A) Allowance for Doubtful Accounts should be credited. 
B) Accounts Receivable should be credited. 
C) Bad Debts Expense should be credited. 
D) Sales should be debited.

Question 3

Allowance for Doubtful Accounts is credited when an account is determined to be uncollectible.

Accepted Answer

A) True 
 B)False

Question 4

Under the allowance method for uncollectible accounts, when a specific account is written off

Accepted Answer

A) total assets will be unchanged. 
B) net profit will decrease. 
C) total assets will decrease. 
D) total assets will increase. 
A) total assets will be unchanged. 
B) net profit will decrease. 
C) total assets will decrease. 
D) total assets will increase.

Question 5

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 6

A debit balance in the Allowance for Doubtful Accounts

Accepted Answer

A) is the normal balance for that account. 
B) indicates that actual bad debt write offs are higher than previous provisions for bad debts. 
C) indicates that actual bad debt write offs have been less than what was estimated. 
D) cannot occur if the percentage of receivables method of estimating bad debts is used. 
A) is the normal balance for that account. 
B) indicates that actual bad debt write offs are higher than previous provisions for bad debts. 
C) indicates that actual bad debt write offs have been less than what was estimated. 
D) cannot occur if the percentage of receivables method of estimating bad debts is used.

Question 7

Explain the statement presentation of receivables.

Accepted Answer

Each major type of receivable should be

Question 8

A dishonoured note is a note that is not paid in full at maturity.

Accepted Answer

A) True 
 B)False

Question 9

Both Bad Debts Expense and Interest Revenue are reported as operating expenses in the income statement.

Accepted Answer

A) True 
 B)False

Question 10

Under the allowance method for uncollectible accounts, writing off an uncollectible account

Accepted Answer

A) affects only statement of financial position accounts. 
B) affects both statement of financial position and income statement accounts. 
C) affects only income statement accounts. 
D) affects either statement of financial position or income statement accounts. 
A) affects only statement of financial position accounts. 
B) affects both statement of financial position and income statement accounts. 
C) affects only income statement accounts. 
D) affects either statement of financial position or income statement accounts.

Question 11

If a company fails to record estimated bad debts expense, then

Accepted Answer

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

Question 12

Under the allowance method for uncollectible accounts, Bad Debts Expense is recorded

Accepted Answer

A) when an individual account is written off. 
B) when the amount of loss is known. 
C) for an amount that the company estimates it will not collect. 
D) several times during the accounting period. 
A) when an individual account is written off. 
B) when the amount of loss is known. 
C) for an amount that the company estimates it will not collect. 
D) several times during the accounting period.

Question 13

If Winner Ltd.accepts a note receivable from Loser Inc.for the sale of equipment

Accepted Answer

A) Loser is the payee of the note and Winner is the maker of the note. 
B) Loser is the maker of the note and Winner is the payee of the note. 
C) Loser is the creditor and Winner is the debtor. 
D) Loser has a note receivable and Winner has a note payable. 
A) Loser is the payee of the note and Winner is the maker of the note. 
B) Loser is the maker of the note and Winner is the payee of the note. 
C) Loser is the creditor and Winner is the debtor. 
D) Loser has a note receivable and Winner has a note payable.

Question 14

An aging of a company's accounts receivable indicates that $6,500 is estimated to be uncollectible.If Allowance for Doubtful Accounts has a $1,200 credit balance, the adjustment to record bad debts for the period will require a

Accepted Answer

A) debit to Bad Debts Expense for $6,500. 
B) debit to Allowance for Doubtful Accounts for $5,300. 
C) debit to Bad Debts Expense for $5,300. 
D) credit to Allowance for Doubtful Accounts for $7,700. 
A) debit to Bad Debts Expense for $6,500. 
B) debit to Allowance for Doubtful Accounts for $5,300. 
C) debit to Bad Debts Expense for $5,300. 
D) credit to Allowance for Doubtful Accounts for $7,700.

Question 15

The receivables turnover should be analyzed in conjunction with other ratios such as the current ratio and inventory turnover.

Accepted Answer

A) True 
 B)False

Question 16

A promissory note

Accepted Answer

A) is not a formal credit instrument. 
B) may be used to settle an account receivable. 
C) has the party to whom the money is due as the maker. 
D) cannot be factored to another party. 
A) is not a formal credit instrument. 
B) may be used to settle an account receivable. 
C) has the party to whom the money is due as the maker. 
D) cannot be factored to another party.

Question 17

Receivables are generally valued and reported in the statement of financial position at their gross amount less the allowance for doubtful accounts.

Accepted Answer

A) True 
 B)False

Question 18

The net realizable value of the Accounts Receivable is $21,000 before the write off of a $1,500 account.What is the net realizable value after the write off?

Accepted Answer

A) $22,500 
B) $21,000 
C) $19,500 
D) $18,000 
A) $22,500 
B) $21,000 
C) $19,500 
D) $18,000

Question 19

An aging of accounts receivable schedule is based on the premise that the longer the period an account remains unpaid, the greater the probability that it will eventually be collected.

Accepted Answer

A) True 
 B)False

Question 20

The account Allowance for Doubtful Accounts is classified as a(n)

Accepted Answer

A) liability. 
B) contra account to Bad Debts Expense. 
C) expense. 
D) contra account to Accounts Receivable. 
A) liability. 
B) contra account to Bad Debts Expense. 
C) expense. 
D) contra account to Accounts Receivable.

Interest accrued on a note receivable is

When an account becomes uncollectible and must be written off

Allowance for Doubtful Accounts is credited when an account is determined to be uncollectible.

Under the allowance method for uncollectible accounts, when a specific account is written off

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

A debit balance in the Allowance for Doubtful Accounts

Explain the statement presentation of receivables.

A dishonoured note is a note that is not paid in full at maturity.

Both Bad Debts Expense and Interest Revenue are reported as operating expenses in the income statement.

Under the allowance method for uncollectible accounts, writing off an uncollectible account

If a company fails to record estimated bad debts expense, then

Under the allowance method for uncollectible accounts, Bad Debts Expense is recorded

If Winner Ltd.accepts a note receivable from Loser Inc.for the sale of equipment

An aging of a company's accounts receivable indicates that $6,500 is estimated to be uncollectible.If Allowance for Doubtful Accounts has a $1,200 credit balance, the adjustment to record bad debts for the period will require a

The receivables turnover should be analyzed in conjunction with other ratios such as the current ratio and inventory turnover.

A promissory note

Receivables are generally valued and reported in the statement of financial position at their gross amount less the allowance for doubtful accounts.

The net realizable value of the Accounts Receivable is $21,000 before the write off of a $1,500 account.What is the net realizable value after the write off?

An aging of accounts receivable schedule is based on the premise that the longer the period an account remains unpaid, the greater the probability that it will eventually be collected.

The account Allowance for Doubtful Accounts is classified as a(n)

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

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 Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Filters

Exam 8: Reporting and Analyzing Receivables

Interest accrued on a note receivable is

When an account becomes uncollectible and must be written off

Allowance for Doubtful Accounts is credited when an account is determined to be uncollectible.

Under the allowance method for uncollectible accounts, when a specific account is written off

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

A debit balance in the Allowance for Doubtful Accounts

Explain the statement presentation of receivables.

A dishonoured note is a note that is not paid in full at maturity.

Both Bad Debts Expense and Interest Revenue are reported as operating expenses in the income statement.

Under the allowance method for uncollectible accounts, writing off an uncollectible account

If a company fails to record estimated bad debts expense, then

Under the allowance method for uncollectible accounts, Bad Debts Expense is recorded

If Winner Ltd.accepts a note receivable from Loser Inc.for the sale of equipment

An aging of a company's accounts receivable indicates that $6,500 is estimated to be uncollectible.If Allowance for Doubtful Accounts has a $1,200 credit balance, the adjustment to record bad debts for the period will require a

The receivables turnover should be analyzed in conjunction with other ratios such as the current ratio and inventory turnover.

A promissory note

Receivables are generally valued and reported in the statement of financial position at their gross amount less the allowance for doubtful accounts.

The net realizable value of the Accounts Receivable is $21,000 before the write off of a $1,500 account.What is the net realizable value after the write off?

An aging of accounts receivable schedule is based on the premise that the longer the period an account remains unpaid, the greater the probability that it will eventually be collected.

The account Allowance for Doubtful Accounts is classified as a(n)

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

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 Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Filters