Question 1

The receivable that is usually evidenced by a formal, written instrument of credit is a (n)

Accepted Answer

A)  trade receivable 
B)  note receivable 
C)  accounts receivable 
D)  income tax receivable 
A)  trade receivable 
B)  note receivable 
C)  accounts receivable 
D)  income tax receivable

Question 2

The accounts receivable turnover measures the length of time in days it takes to collect a receivable.

Accepted Answer

A) True 
 B)False

Question 3

Match each description to the appropriate term (a-d). Each term may be used more than once.
-This method focuses on the balance sheet.

Accepted Answer

A) Direct write-off method 
B) Aging of receivables method 
C) Percent of sales method 
D) Allowance method 
A) Direct write-off method 
B) Aging of receivables method 
C) Percent of sales method 
D) Allowance method

Question 4

​GAAP requires companies with a large amount of receivables to use the allowance method.

Accepted Answer

A) True 
 B)False

Question 5

Match each description to the appropriate term (a-d). Each term may be used more than once.
-This method focuses on the income statement.

Accepted Answer

A) Direct write-off method 
B) Aging of receivables method 
C) Percent of sales method 
D) Allowance method 
A) Direct write-off method 
B) Aging of receivables method 
C) Percent of sales method 
D) Allowance method

Question 6

When a company uses the allowance method of accounting for uncollectible receivables, which entry would not be found in the general journal? a. Bad Debt Expense $\quad 500$
Allowance for Doubtful Accounts 500
b. Bad Debt Expense $\quad 500$
Accounts Receivable-Bob Smith 500
c. Cash 300
Allowance for Doubtful Accounts 200
Accounts Receivable-Bob Smith $\quad 500$
$\begin{array}{lr}
d. Cash &500\
~~~~\text { Accounts Receivable-Bob Smith }&500
\end{array}$

Accepted Answer

The answer of When a company uses the allowance method...

Question 7

List at least three indicators that a receivable may be uncollectible.

Accepted Answer

Answers may vary and should include thre

Question 8

​No allowance account is used with the direct write-off method.

Accepted Answer

A) True 
 B)False

Question 9

Of the two methods of accounting for uncollectible receivables, the allowance method makes use of an estimate of uncollectible receivables.

Accepted Answer

A) True 
 B)False

Question 10

If the allowance method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible?

Accepted Answer

A)  Uncollectible Accounts Expense 
B)  Allowance for Doubtful Accounts 
C)  Accounts Receivable 
D)  Interest Expense 
A)  Uncollectible Accounts Expense 
B)  Allowance for Doubtful Accounts 
C)  Accounts Receivable 
D)  Interest Expense

Question 11

The term "receivables" includes all

Accepted Answer

A)  money claims against other entities 
B)  merchandise to be collected from individuals or companies 
C)  cash to be paid to creditors 
D)  cash to be paid to debtors 
A)  money claims against other entities 
B)  merchandise to be collected from individuals or companies 
C)  cash to be paid to creditors 
D)  cash to be paid to debtors

Question 12

Allowance for Doubtful Accounts has a debit balance of $600 at the end of the year (before adjustment), and an analysis of accounts in the customers ledger indicates uncollectible receivables of $13,000. Which of the following entries records the proper adjusting entry for bad debt expense?

Accepted Answer

A)  debit Bad Debt Expense, $600; credit Allowance for Doubtful Accounts, $600 
B)  debit Bad Debt Expense, $12,400; credit Allowance for Doubtful Accounts, $12,400 
C)  debit Allowance for Doubtful Accounts, $600; credit Bad Debt Expense, $600 
D)  debit Bad Debt Expense, $13,600; credit Allowance for Doubtful Accounts, $13,600 
A)  debit Bad Debt Expense, $600; credit Allowance for Doubtful Accounts, $600 
B)  debit Bad Debt Expense, $12,400; credit Allowance for Doubtful Accounts, $12,400 
C)  debit Allowance for Doubtful Accounts, $600; credit Bad Debt Expense, $600 
D)  debit Bad Debt Expense, $13,600; credit Allowance for Doubtful Accounts, $13,600

Question 13

A primary difference between the direct write-off and allowance methods is whether or not bad debt is based on a percentage of sales.

Accepted Answer

A) True 
 B)False

Question 14

Mr. Potts issued a 90-day, 7% note for $200,000, dated February 3 to Valley Co. on account. 
(Assume a 360-day year when calculating interest.)
(a) Determine the due date of the note.
(b) Determine the interest.
(c) Determine the maturity value of the note.
(d) Journalize the entry to record the receipt of the note from Potts on February 3.
(e) Journalize the entry to record the receipt of payment of the note at maturity by Valley Co.

Accepted Answer

(a) May 4, determined as?   (b)Interest

Question 15

Match each description to the appropriate term (a-h).
-A formal, written instrument of credit that represents amounts due from customers

Accepted Answer

A) Face amount 
B) Term 
C) Interest 
D) Maturity value 
E) Dishonored note
F)Maker
G)Notes receivable
H)Interest rate 
A) Face amount 
B) Term 
C) Interest 
D) Maturity value 
E) Dishonored note
F)Maker
G)Notes receivable
H)Interest rate

Question 16

The due date of a 60-day note dated July 10 is September 10.

Accepted Answer

A) True 
 B)False

Question 17

One of the weaknesses of the direct write-off method is that it

Accepted Answer

A)  understates accounts receivable on the balance sheet 
B)  violates the matching principle 
C)  is too difficult to use for many companies 
D)  is based on estimates 
A)  understates accounts receivable on the balance sheet 
B)  violates the matching principle 
C)  is too difficult to use for many companies 
D)  is based on estimates

Question 18

Other receivables includes all of the following except

Accepted Answer

A)  notes receivable 
B)  receivables from employees 
C)  taxes receivable 
D)  interest receivable 
A)  notes receivable 
B)  receivables from employees 
C)  taxes receivable 
D)  interest receivable

Question 19

Match each description to the appropriate term (a-d). Each term may be used more than once.
-When using this method, estimated bad debts are added to the existing allowance balance.

Accepted Answer

A) Direct write-off method 
B) Aging of receivables method 
C) Percent of sales method 
D) Allowance method 
A) Direct write-off method 
B) Aging of receivables method 
C) Percent of sales method 
D) Allowance method

Question 20

Match each description to the appropriate term (a-i).
-Records bad debt expense only when a specific customer's account is deemed worthless

Accepted Answer

A) Accounts receivable turnover 
B) Net realizable value 
C) Accounts receivable 
D) Aging the receivables 
E) Receivables
F)Direct write-off method
G)Allowance for doubtful accounts
H)Bad debt expense
I)Notes receivable 
A) Accounts receivable turnover 
B) Net realizable value 
C) Accounts receivable 
D) Aging the receivables 
E) Receivables
F)Direct write-off method
G)Allowance for doubtful accounts
H)Bad debt expense
I)Notes receivable

Exam 9: Receivables

The receivable that is usually evidenced by a formal, written instrument of credit is a (n)

The accounts receivable turnover measures the length of time in days it takes to collect a receivable.

Match each description to the appropriate term (a-d). Each term may be used more than once. -This method focuses on the balance sheet.

​GAAP requires companies with a large amount of receivables to use the allowance method.

Match each description to the appropriate term (a-d). Each term may be used more than once. -This method focuses on the income statement.

List at least three indicators that a receivable may be uncollectible.

​No allowance account is used with the direct write-off method.

Of the two methods of accounting for uncollectible receivables, the allowance method makes use of an estimate of uncollectible receivables.

If the allowance method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible?

The term "receivables" includes all

Allowance for Doubtful Accounts has a debit balance of $600 at the end of the year (before adjustment), and an analysis of accounts in the customers ledger indicates uncollectible receivables of $13,000. Which of the following entries records the proper adjusting entry for bad debt expense?

A primary difference between the direct write-off and allowance methods is whether or not bad debt is based on a percentage of sales.

Match each description to the appropriate term (a-h). -A formal, written instrument of credit that represents amounts due from customers

The due date of a 60-day note dated July 10 is September 10.

One of the weaknesses of the direct write-off method is that it

Other receivables includes all of the following except

Match each description to the appropriate term (a-d). Each term may be used more than once. -When using this method, estimated bad debts are added to the existing allowance balance.

Match each description to the appropriate term (a-i). -Records bad debt expense only when a specific customer's account is deemed worthless

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Internal Control and Cash

Long-Term Assets: Fixed and Intangible

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Cost-Volume-Profit Analysis

Evaluating Variances From Standard Costs

Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Filters

GAAP requires companies with a large amount of receivables to use the allowance method.

No allowance account is used with the direct write-off method.