Question 1

If the amount of bad debts expense is understated at year end, then

Accepted Answer

A) profit will be understated. 
B) shareholders' equity will be understated. 
C) Allowance for Doubtful Accounts will be overstated. 
D) net Accounts Receivable will be overstated. 
A) profit will be understated. 
B) shareholders' equity will be understated. 
C) Allowance for Doubtful Accounts will be overstated. 
D) net Accounts Receivable will be overstated.

Question 2

A factor is a finance company or bank that buys receivables from businesses for a fee.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is true about the presentation of receivables?

Accepted Answer

A) Companies must report gross accounts receivable on the statement of financial position. 
B) Companies must report the net realizable value of accounts receivable on the statement of financial position. 
C) Bad debt expense must be reported under non-operating expenses in the income statement. 
D) The allowance for doubtful accounts must be reported in the liabilities section of the statement of financial position. 
A) Companies must report gross accounts receivable on the statement of financial position. 
B) Companies must report the net realizable value of accounts receivable on the statement of financial position. 
C) Bad debt expense must be reported under non-operating expenses in the income statement. 
D) The allowance for doubtful accounts must be reported in the liabilities section of the statement of financial position.

Question 4

A company may sell its accounts receivable to a factor to

Accepted Answer

A) speed up the collection of accounts receivable. 
B) hide the receivables from creditors. 
C) avoid selling on account. 
D) allow its customers more time to pay their bills. 
A) speed up the collection of accounts receivable. 
B) hide the receivables from creditors. 
C) avoid selling on account. 
D) allow its customers more time to pay their bills.

Question 5

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.

Question 6

The term "receivables" refers to

Accepted Answer

A) amounts due from individuals or companies. 
B) merchandise to be collected from individuals or companies. 
C) cash to be paid to creditors. 
D) cash to be paid to debtors. 
A) amounts due from individuals or companies. 
B) merchandise to be collected from individuals or companies. 
C) cash to be paid to creditors. 
D) cash to be paid to debtors.

Question 7

Which one of the following is not an accounting issue associated with accounts receivable?

Accepted Answer

A) Depreciating accounts receivable 
B) Recognizing accounts receivable 
C) Valuing accounts receivable 
D) Estimating the amount collectible 
A) Depreciating accounts receivable 
B) Recognizing accounts receivable 
C) Valuing accounts receivable 
D) Estimating the amount collectible

Question 8

Common ways to speed up cash flow from accounts receivable do not include

Accepted Answer

A) offering customers a discount if they pay earlier than the due date. 
B) borrowing money using accounts receivable as collateral. 
C) accepting bank debit and credit cards in payment. 
D) increasing the payment period from 30 to 45 days. 
A) offering customers a discount if they pay earlier than the due date. 
B) borrowing money using accounts receivable as collateral. 
C) accepting bank debit and credit cards in payment. 
D) increasing the payment period from 30 to 45 days.

Question 9

When an account is written off using the allowance method for uncollectible accounts, accounts receivable

Accepted Answer

A) is unchanged and the allowance account increases. 
B) increases and the allowance account increases. 
C) decreases and the allowance account decreases. 
D) decreases and the allowance account increases. 
A) is unchanged and the allowance account increases. 
B) increases and the allowance account increases. 
C) decreases and the allowance account decreases. 
D) decreases and the allowance account increases.

Question 10

Accounts receivable can be the result of either cash or credit sales.

Accepted Answer

A) True 
 B)False

Question 11

The maturity value of an $8,000, 6.5%, 3-month note receivable dated February 10, with interest due at maturity, is

Accepted Answer

A) $8,000. 
B) $8,065. 
C) $8,130. 
D) $8,520. 
A) $8,000. 
B) $8,065. 
C) $8,130. 
D) $8,520.

Question 12

Gray Inc. lends White Ltd. $60,000 on April 1, accepting a 6-month, 4.5% interest note. Interest is due the first of each month, commencing May 1. Gray Inc. prepares financial statements on April 30. What adjusting entry should be made before the financial statements can be prepared?

Accepted Answer

The answer of Gray Inc. lends White Ltd. $60,000 on...

Question 13

To find the balance due from an individual customer, the accountant would refer to the

Accepted Answer

A) General Journal. 
B) Sales account in the general ledger. 
C) Accounts Receivable subsidiary ledger. 
D) Accounts Receivable account in the general ledger. 
A) General Journal. 
B) Sales account in the general ledger. 
C) Accounts Receivable subsidiary ledger. 
D) Accounts Receivable account in the general ledger.

Question 14

Writing off an uncollectible account involves

Accepted Answer

A) a debit to Bad Debts Expense. 
B) a debit to Allowance for Doubtful accounts. 
C) a debit to Sales Returns and Allowances. 
D) a debit to Accounts Receivable. 
A) a debit to Bad Debts Expense. 
B) a debit to Allowance for Doubtful accounts. 
C) a debit to Sales Returns and Allowances. 
D) a debit to Accounts Receivable.

Question 15

Accounts receivable are valued and reported on the statement of financial position

Accepted Answer

A) in the non-current asset section. 
B) at the gross amount less sales returns and allowances. 
C) at net realizable value. 
D) only if they are not past due. 
A) in the non-current asset section. 
B) at the gross amount less sales returns and allowances. 
C) at net realizable value. 
D) only if they are not past due.

Question 16

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 17

Estimated uncollectibles are recorded as a debit to

Accepted Answer

A) Allowance for Doubtful Accounts. 
B) Bad Debts Expense. 
C) Sales. 
D) Accounts Receivable. 
A) Allowance for Doubtful Accounts. 
B) Bad Debts Expense. 
C) Sales. 
D) Accounts Receivable.

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

Bad Debts Expense is a contra account to the Sales account.

Accepted Answer

A) True 
 B)False

Question 20

Night Corp receives a $4,000, 3-month, 8% note from Day Corp in settlement of a past due account receivable. What entry will Night Corp make upon receiving the note?

Accepted Answer

The answer of Night Corp receives a $4,000, 3-month, 8%...

If the amount of bad debts expense is understated at year end, then

A factor is a finance company or bank that buys receivables from businesses for a fee.

Which of the following is true about the presentation of receivables?

A company may sell its accounts receivable to a factor to

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

The term "receivables" refers to

Which one of the following is not an accounting issue associated with accounts receivable?

Common ways to speed up cash flow from accounts receivable do not include

When an account is written off using the allowance method for uncollectible accounts, accounts receivable

Accounts receivable can be the result of either cash or credit sales.

The maturity value of an $8,000, 6.5%, 3-month note receivable dated February 10, with interest due at maturity, is

Gray Inc. lends White Ltd. $60,000 on April 1, accepting a 6-month, 4.5% interest note. Interest is due the first of each month, commencing May 1. Gray Inc. prepares financial statements on April 30. What adjusting entry should be made before the financial statements can be prepared?

To find the balance due from an individual customer, the accountant would refer to the

Writing off an uncollectible account involves

Accounts receivable are valued and reported on the statement of financial position

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

Estimated uncollectibles are recorded as a debit to

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?

Bad Debts Expense is a contra account to the Sales account.

Night Corp receives a $4,000, 3-month, 8% note from Day Corp in settlement of a past due account receivable. What entry will Night Corp make upon receiving the note?

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

If the amount of bad debts expense is understated at year end, then

A factor is a finance company or bank that buys receivables from businesses for a fee.

Which of the following is true about the presentation of receivables?

A company may sell its accounts receivable to a factor to

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

The term "receivables" refers to

Which one of the following is not an accounting issue associated with accounts receivable?

Common ways to speed up cash flow from accounts receivable do not include

When an account is written off using the allowance method for uncollectible accounts, accounts receivable

Accounts receivable can be the result of either cash or credit sales.

The maturity value of an $8,000, 6.5%, 3-month note receivable dated February 10, with interest due at maturity, is

Gray Inc. lends White Ltd. $60,000 on April 1, accepting a 6-month, 4.5% interest note. Interest is due the first of each month, commencing May 1. Gray Inc. prepares financial statements on April 30. What adjusting entry should be made before the financial statements can be prepared?

To find the balance due from an individual customer, the accountant would refer to the

Writing off an uncollectible account involves

Accounts receivable are valued and reported on the statement of financial position

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

Estimated uncollectibles are recorded as a debit to

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?

Bad Debts Expense is a contra account to the Sales account.

Night Corp receives a $4,000, 3-month, 8% note from Day Corp in settlement of a past due account receivable. What entry will Night Corp make upon receiving the note?

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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