Question 1

Allowance for Doubtful Accounts is a contra account that is deducted from Accounts Receivable on the statement of financial position.

Accepted Answer

A) True 
 B)False

Question 2

The two key parties to a promissory note are the

Accepted Answer

A) maker and a bank. 
B) debtor and the payee. 
C) maker and the payee. 
D) sender and the receiver. 
A) maker and a bank. 
B) debtor and the payee. 
C) maker and the payee. 
D) sender and the receiver.

Question 3

Trade receivables can be accounts receivable or notes receivable.

Accepted Answer

A) True 
 B)False

Question 4

Uncollectible accounts must be estimated because it is not possible to know which accounts will not be collected.

Accepted Answer

A) True 
 B)False

Question 5

The receivables turnover ratio is calculated by dividing gross credit sales by the average net receivables during the year.

Accepted Answer

A) True 
 B)False

Question 6

Use the following information for questions 
The financial statements of Bolero Manufacturing Inc. report net credit sales of $900,000 and accounts receivable of $80,000 and $40,000 at the beginning of the year and end of the year, respectively.
-What is the receivables turnover ratio for Bolero?

Accepted Answer

A) 7.5 times 
B) 11.25 times 
C) 15.0 times 
D) 22.5 times 
A) 7.5 times 
B) 11.25 times 
C) 15.0 times 
D) 22.5 times

Question 7

Use the following information for questions 
Under the aging of a company's accounts receivable, the uncollectible accounts are estimated to be $24,000. The unadjusted balance for the Allowance for Doubtful Accounts is $8,000 credit.
-What is the amount of bad debts expense for the year?

Accepted Answer

A) $32,000 
B) $24,000 
C) $16,000 
D) $ 8,000 
A) $32,000 
B) $24,000 
C) $16,000 
D) $ 8,000

Question 8

Under the allowance method for uncollectible accounts, Bad Debts Expense is debited when an account is deemed uncollectible and must be written off.

Accepted Answer

A) True 
 B)False

Question 9

Allowance for Doubtful Accounts on the statement of financial position

Accepted Answer

A) is included in current liabilities. 
B) increases the net realizable value of accounts receivable. 
C) appears under the heading "Other Assets." 
D) is deducted from accounts receivable. 
A) is included in current liabilities. 
B) increases the net realizable value of accounts receivable. 
C) appears under the heading "Other Assets." 
D) is deducted from accounts receivable.

Question 10

The normal balance and type of account for the Allowance for Doubtful Accounts is

Accepted Answer

A) debit, contra-asset. 
B) credit, asset. 
C) credit, revenue account. 
D) credit, contra-asset. 
A) debit, contra-asset. 
B) credit, asset. 
C) credit, revenue account. 
D) credit, contra-asset.

Question 11

Under the allowance method for uncollectible accounts

Accepted Answer

A) the net realizable value of accounts receivable is greater before an account is written off than after it is written off. 
B) Bad Debts Expense is debited when a specific account is written off as uncollectible. 
C) the net realizable value of accounts receivable in the statement of financial position is the same before and after an account is written off. 
D) Allowance for Doubtful Accounts is closed each year to Income Summary. 
A) the net realizable value of accounts receivable is greater before an account is written off than after it is written off. 
B) Bad Debts Expense is debited when a specific account is written off as uncollectible. 
C) the net realizable value of accounts receivable in the statement of financial position is the same before and after an account is written off. 
D) Allowance for Doubtful Accounts is closed each year to Income Summary.

Question 12

Which of the following is not a difference between securitization and factoring?

Accepted Answer

A) Securitization involves many investors. 
B) The cost of securitization is lower. 
C) The receivables securitized are of higher quality. 
D) The seller is usually no longer responsible for collection of the receivables. 
A) Securitization involves many investors. 
B) The cost of securitization is lower. 
C) The receivables securitized are of higher quality. 
D) The seller is usually no longer responsible for collection of the receivables.

Question 13

The account Allowance for Doubtful Accounts is necessary because

Accepted Answer

A) when recording bad debts expense, it is not possible to know which specific accounts will not pay. 
B) uncollectible accounts that are written off must be accumulated in a separate account. 
C) a liability results when a credit sale is made. 
D) management needs to accumulate all the credit losses over the years. 
A) when recording bad debts expense, it is not possible to know which specific accounts will not pay. 
B) uncollectible accounts that are written off must be accumulated in a separate account. 
C) a liability results when a credit sale is made. 
D) management needs to accumulate all the credit losses over the years.

Question 14

Under the aging method of estimating the allowance for doubtful accounts, the balance in the allowance account must be considered prior to adjusting for estimated uncollectible accounts.

Accepted Answer

A) True 
 B)False

Question 15

A $20,000, 9%, 3-month note receivable is issued on December 1, with interest due at maturity. When the note is paid the following February, the payee's entry includes (assuming a calendar-year accounting period) a credit to interest revenue of

Accepted Answer

A) $ 150. 
B) $ 300. 
C) $ 450. 
D) $20,450. 
A) $ 150. 
B) $ 300. 
C) $ 450. 
D) $20,450.

Question 16

The balance in Allowance for Doubtful Accounts would have a debit balance when

Accepted Answer

A) the percentage of receivables basis is used. 
B) an uncollectible account is later recovered. 
C) write-offs during the year have been less than previous provisions. 
D) write-offs during the year have exceeded previous provisions. 
A) the percentage of receivables basis is used. 
B) an uncollectible account is later recovered. 
C) write-offs during the year have been less than previous provisions. 
D) write-offs during the year have exceeded previous provisions.

Question 17

If a company such as Sears sponsors its own credit card, when customers use their Sears card the sale is recorded as a cash sale.

Accepted Answer

A) True 
 B)False

Question 18

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 19

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

Accepted Answer

A) True 
 B)False

Question 20

When a note is dishonoured (but eventual collection is expected), the payee's entry includes a

Accepted Answer

A) debit to Cash. 
B) credit to Accounts Receivable. 
C) debit to Interest Expense. 
D) credit to Notes Receivable. 
A) debit to Cash. 
B) credit to Accounts Receivable. 
C) debit to Interest Expense. 
D) credit to Notes Receivable.

Allowance for Doubtful Accounts is a contra account that is deducted from Accounts Receivable on the statement of financial position.

The two key parties to a promissory note are the

Trade receivables can be accounts receivable or notes receivable.

Uncollectible accounts must be estimated because it is not possible to know which accounts will not be collected.

The receivables turnover ratio is calculated by dividing gross credit sales by the average net receivables during the year.

Use the following information for questions The financial statements of Bolero Manufacturing Inc. report net credit sales of $900,000 and accounts receivable of $80,000 and $40,000 at the beginning of the year and end of the year, respectively. -What is the receivables turnover ratio for Bolero?

Use the following information for questions Under the aging of a company's accounts receivable, the uncollectible accounts are estimated to be $24,000. The unadjusted balance for the Allowance for Doubtful Accounts is $8,000 credit. -What is the amount of bad debts expense for the year?

Under the allowance method for uncollectible accounts, Bad Debts Expense is debited when an account is deemed uncollectible and must be written off.

Allowance for Doubtful Accounts on the statement of financial position

The normal balance and type of account for the Allowance for Doubtful Accounts is

Under the allowance method for uncollectible accounts

Which of the following is not a difference between securitization and factoring?

The account Allowance for Doubtful Accounts is necessary because

Under the aging method of estimating the allowance for doubtful accounts, the balance in the allowance account must be considered prior to adjusting for estimated uncollectible accounts.

A $20,000, 9%, 3-month note receivable is issued on December 1, with interest due at maturity. When the note is paid the following February, the payee's entry includes (assuming a calendar-year accounting period) a credit to interest revenue of

The balance in Allowance for Doubtful Accounts would have a debit balance when

If a company such as Sears sponsors its own credit card, when customers use their Sears card the sale is recorded as a cash sale.

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

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

When a note is dishonoured (but eventual collection is expected), the payee's entry includes a

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

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Exam 8: Reporting and Analyzing Receivables

Allowance for Doubtful Accounts is a contra account that is deducted from Accounts Receivable on the statement of financial position.

The two key parties to a promissory note are the

Trade receivables can be accounts receivable or notes receivable.

Uncollectible accounts must be estimated because it is not possible to know which accounts will not be collected.

The receivables turnover ratio is calculated by dividing gross credit sales by the average net receivables during the year.

Use the following information for questions The financial statements of Bolero Manufacturing Inc. report net credit sales of $900,000 and accounts receivable of $80,000 and $40,000 at the beginning of the year and end of the year, respectively. -What is the receivables turnover ratio for Bolero?

Use the following information for questions Under the aging of a company's accounts receivable, the uncollectible accounts are estimated to be $24,000. The unadjusted balance for the Allowance for Doubtful Accounts is $8,000 credit. -What is the amount of bad debts expense for the year?

Under the allowance method for uncollectible accounts, Bad Debts Expense is debited when an account is deemed uncollectible and must be written off.

Allowance for Doubtful Accounts on the statement of financial position

The normal balance and type of account for the Allowance for Doubtful Accounts is

Under the allowance method for uncollectible accounts

Which of the following is not a difference between securitization and factoring?

The account Allowance for Doubtful Accounts is necessary because

Under the aging method of estimating the allowance for doubtful accounts, the balance in the allowance account must be considered prior to adjusting for estimated uncollectible accounts.

A $20,000, 9%, 3-month note receivable is issued on December 1, with interest due at maturity. When the note is paid the following February, the payee's entry includes (assuming a calendar-year accounting period) a credit to interest revenue of

The balance in Allowance for Doubtful Accounts would have a debit balance when

If a company such as Sears sponsors its own credit card, when customers use their Sears card the sale is recorded as a cash sale.

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

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

When a note is dishonoured (but eventual collection is expected), the payee's entry includes a

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

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