Question 1

One might infer from a debit balance in Allowance for Doubtful Accounts that

Accepted Answer

A) a posting error has been made. 
B) more accounts have been written off than had been estimated would be uncollectible. 
C) the percentage of receivables basis is being used. 
D) bad debts expense has been overestimated. 
A) a posting error has been made. 
B) more accounts have been written off than had been estimated would be uncollectible. 
C) the percentage of receivables basis is being used. 
D) bad debts expense has been overestimated.

Question 2

The collection of an account that had been previously written off under the allowance method for uncollectible accounts

Accepted Answer

A) increases profit in the period of collection. 
B) involves a credit to Bad Debt Expense. 
C) will usually require two journal entries. 
D) is recorded by debiting Cash and crediting Bad Debt Expense. 
A) increases profit in the period of collection. 
B) involves a credit to Bad Debt Expense. 
C) will usually require two journal entries. 
D) is recorded by debiting Cash and crediting Bad Debt Expense.

Question 3

Trade receivables occur when two companies trade or exchange notes receivables.

Accepted Answer

A) True 
 B)False

Question 4

The percentage of receivables basis of estimating uncollectible accounts ignores the existing balance in the allowance account when the bad debts adjusting entry is recorded.

Accepted Answer

A) True 
 B)False

Question 5

When the due date of a note is stated in months, the time factor in calculating interest, if it is due monthly, is the number of months divided by 12.

Accepted Answer

A) True 
 B)False

Question 6

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 7

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 average collection period for accounts receivable in days (rounded)?

Accepted Answer

A) 16 
B) 24 
C) 32 
D) 49 
A) 16 
B) 24 
C) 32 
D) 49

Question 8

Two accounting issues associated with accounts receivable are

Accepted Answer

A) valuing and selling. 
B) depreciating and collecting. 
C) recognizing and valuing. 
D) recognizing and accelerating collections. 
A) valuing and selling. 
B) depreciating and collecting. 
C) recognizing and valuing. 
D) recognizing and accelerating collections.

Question 9

Under the allowance method for uncollectible accounts, when a year-end adjustment is made for estimated uncollectible accounts

Accepted Answer

A) total assets decrease. 
B) total assets are unchanged. 
C) net profit is unchanged. 
D) liabilities decrease. 
A) total assets decrease. 
B) total assets are unchanged. 
C) net profit is unchanged. 
D) liabilities decrease.

Question 10

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 11

The Allowance for Doubtful Accounts is a liability account.

Accepted Answer

A) True 
 B)False

Question 12

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 13

A receivable is recognized regardless of collection risk.

Accepted Answer

A) True 
 B)False

Question 14

Bad Debts 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 15

Under the aging of a company's accounts receivable, the uncollectible accounts are estimated to be $26,000. If the unadjusted balance for the Allowance for Doubtful Accounts is $9,000 debit, what is the amount of bad debts expense for the year?

Accepted Answer

A) $17,000 
B) $18,000 
C) $26,000 
D) $35,000 
A) $17,000 
B) $18,000 
C) $26,000 
D) $35,000

Question 16

The two key parties to a note are the maker and the payee.

Accepted Answer

A) True 
 B)False

Question 17

An aging of a company's accounts receivable indicates that $13,000 is estimated to be uncollectible. If the Allowance for Doubtful Accounts has a $2,400 debit balance, the adjustment to record bad debts for the period will require a

Accepted Answer

A) debit to Bad Debts Expense for $15,400. 
B) debit to Bad Debts Expense for $13,000. 
C) debit to Bad Debts Expense for $10,600. 
D) debit to Allowance for Doubtful Accounts for $13,000. 
A) debit to Bad Debts Expense for $15,400. 
B) debit to Bad Debts Expense for $13,000. 
C) debit to Bad Debts Expense for $10,600. 
D) debit to Allowance for Doubtful Accounts for $13,000.

Question 18

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 19

Interest is usually associated with

Accepted Answer

A) accounts receivable. 
B) notes receivable. 
C) doubtful accounts. 
D) bad debts. 
A) accounts receivable. 
B) notes receivable. 
C) doubtful accounts. 
D) bad debts.

Question 20

Under the allowance method for uncollectible accounts, the net realizable value of receivables is the same both before and after an account that had previously been written off is recovered.

Accepted Answer

A) True 
 B)False

One might infer from a debit balance in Allowance for Doubtful Accounts that

The collection of an account that had been previously written off under the allowance method for uncollectible accounts

Trade receivables occur when two companies trade or exchange notes receivables.

The percentage of receivables basis of estimating uncollectible accounts ignores the existing balance in the allowance account when the bad debts adjusting entry is recorded.

When the due date of a note is stated in months, the time factor in calculating interest, if it is due monthly, is the number of months divided by 12.

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

Two accounting issues associated with accounts receivable are

Under the allowance method for uncollectible accounts, when a year-end adjustment is made for estimated uncollectible accounts

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

The Allowance for Doubtful Accounts is a liability account.

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

A receivable is recognized regardless of collection risk.

Bad Debts Expense is considered

Under the aging of a company's accounts receivable, the uncollectible accounts are estimated to be $26,000. If the unadjusted balance for the Allowance for Doubtful Accounts is $9,000 debit, what is the amount of bad debts expense for the year?

The two key parties to a note are the maker and the payee.

An aging of a company's accounts receivable indicates that $13,000 is estimated to be uncollectible. If the Allowance for Doubtful Accounts has a $2,400 debit balance, the adjustment to record bad debts for the period will require a

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

Interest is usually associated with

Under the allowance method for uncollectible accounts, the net realizable value of receivables is the same both before and after an account that had previously been written off is recovered.

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

One might infer from a debit balance in Allowance for Doubtful Accounts that

The collection of an account that had been previously written off under the allowance method for uncollectible accounts

Trade receivables occur when two companies trade or exchange notes receivables.

The percentage of receivables basis of estimating uncollectible accounts ignores the existing balance in the allowance account when the bad debts adjusting entry is recorded.

When the due date of a note is stated in months, the time factor in calculating interest, if it is due monthly, is the number of months divided by 12.

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

Two accounting issues associated with accounts receivable are

Under the allowance method for uncollectible accounts, when a year-end adjustment is made for estimated uncollectible accounts

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

The Allowance for Doubtful Accounts is a liability account.

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

A receivable is recognized regardless of collection risk.

Bad Debts Expense is considered

Under the aging of a company's accounts receivable, the uncollectible accounts are estimated to be $26,000. If the unadjusted balance for the Allowance for Doubtful Accounts is $9,000 debit, what is the amount of bad debts expense for the year?

The two key parties to a note are the maker and the payee.

An aging of a company's accounts receivable indicates that $13,000 is estimated to be uncollectible. If the Allowance for Doubtful Accounts has a $2,400 debit balance, the adjustment to record bad debts for the period will require a

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

Interest is usually associated with

Under the allowance method for uncollectible accounts, the net realizable value of receivables is the same both before and after an account that had previously been written off is recovered.

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

Filters