Question 1

The accounts receivable turnover is needed to calculate

Accepted Answer

A) the average collection period in days. 
B) market risk. 
C) return on assets. 
D) current ratio. 
A) the average collection period in days. 
B) market risk. 
C) return on assets. 
D) current ratio. A

Question 2

Rosen Company receives a $9,000, 3-month, 6% promissory note from Bay Company in settlement of an open accounts receivable.What entry will Rosen Company make upon receiving the note?

Accepted Answer

D

Question 3

If the amount of uncollectible account expense is understated at year end

Accepted Answer

A) net income will be understated. 
B) stockholders' equity will be understated. 
C) Allowance for Doubtful accounts will be overstated. 
D) the cash realizable value of accounts receivable will be overstated. 
A) net income will be understated. 
B) stockholders' equity will be understated. 
C) Allowance for Doubtful accounts will be overstated. 
D) the cash realizable value of accounts receivable will be overstated. D

Question 4

The direct write-off method of accounting for uncollectible accounts

Accepted Answer

A) emphasizes the matching of expenses with revenues. 
B) emphasizes balance sheet relationships. 
C) emphasizes cash realizable value. 
D) is not generally accepted as a basis for estimating bad debts. 
A) emphasizes the matching of expenses with revenues. 
B) emphasizes balance sheet relationships. 
C) emphasizes cash realizable value. 
D) is not generally accepted as a basis for estimating bad debts.

Question 5

Allowance for Doubtful Accounts on the balance sheet

Accepted Answer

A) is offset against total current assets. 
B) increases the cash realizable value of accounts receivable. 
C) appears under the heading "Other Assets." 
D) is deducted from accounts receivable. 
A) is offset against total current assets. 
B) increases the cash realizable value of accounts receivable. 
C) appears under the heading "Other Assets." 
D) is deducted from accounts receivable.

Question 6

When customers make purchases with a national credit card, the retailer

Accepted Answer

A) is responsible for maintaining customer accounts. 
B) is not involved in the collection process. 
C) absorbs any losses from uncollectible accounts. 
D) receives cash equal to the full price of the merchandise sold. 
A) is responsible for maintaining customer accounts. 
B) is not involved in the collection process. 
C) absorbs any losses from uncollectible accounts. 
D) receives cash equal to the full price of the merchandise sold.

Question 7

Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $45,000.If the balance of the Allowance for Doubtful Accounts is a $6,000 credit before adjustment, what is the amount of bad debt expense for that period?

Accepted Answer

A) $45,000 
B) $39,000 
C) $51,000 
D) $6,000 
A) $45,000 
B) $39,000 
C) $51,000 
D) $6,000

Question 8

All of the following statements regarding the financial statement presentation of receivables are true except:

Accepted Answer

A) Short-term receivables are reported in the current assets section of the balance sheet. 
B) The gross amount of receivables less the allowance for doubtful accounts is equal to the net receivables. 
C) Short-term receivables are reported above the short-term investments in the balance sheet. 
D) Companies report bad debts expense under "Selling Expenses" in the operating expenses section of the income statement. 
A) Short-term receivables are reported in the current assets section of the balance sheet. 
B) The gross amount of receivables less the allowance for doubtful accounts is equal to the net receivables. 
C) Short-term receivables are reported above the short-term investments in the balance sheet. 
D) Companies report bad debts expense under "Selling Expenses" in the operating expenses section of the income statement.

Question 9

Receivables are

Accepted Answer

A) one of the most liquid assets and thus are always considered current assets. 
B) claims that are expected to be collected in cash. 
C) shown on the income statement at cash realizable value. 
D) always the result of revenue recognition. 
A) one of the most liquid assets and thus are always considered current assets. 
B) claims that are expected to be collected in cash. 
C) shown on the income statement at cash realizable value. 
D) always the result of revenue recognition.

Question 10

When a note is dishonored, the payee's entry includes a

Accepted Answer

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

Question 11

YZ Company accepted a national credit card for a $10,000 purchase.The cost of the goods sold is $8,000.The credit card company charges a 3% fee.What is the impact of this transaction on net operating income?

Accepted Answer

A) Increase by $1,940. 
B) Increase by $2,000. 
C) Increase by $1,700. 
D) Increase by $9,700. 
A) Increase by $1,940. 
B) Increase by $2,000. 
C) Increase by $1,700. 
D) Increase by $9,700.

Question 12

The bookkeeper recorded the following journal entry   Which one of the following statements is false?

Accepted Answer

A) This entry is only prepared on the last day of the accounting period. 
B) There should be written authorization for this transaction from someone who does not have responsibilities related to recording cash. 
C) There could be a violation of internal control policies. 
D) James' account was written off because it was determined to be uncollectible. 
A) This entry is only prepared on the last day of the accounting period. 
B) There should be written authorization for this transaction from someone who does not have responsibilities related to recording cash. 
C) There could be a violation of internal control policies. 
D) James' account was written off because it was determined to be uncollectible.

Question 13

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

Accepted Answer

A) will increase income in the period it is collected. 
B) will decrease income in the period it is collected. 
C) requires a correcting entry for the period in which the account was written off. 
D) does not affect income in the period it is collected. 
A) will increase income in the period it is collected. 
B) will decrease income in the period it is collected. 
C) requires a correcting entry for the period in which the account was written off. 
D) does not affect income in the period it is collected.

Question 14

An aging of a company's accounts receivable indicates that $9,000 are estimated to be uncollectible.If Allowance for Doubtful Accounts has a $3,200 debit balance, the adjustment to record bad debts for the period will require a

Accepted Answer

A) debit to Bad Debt Expense for $9,000. 
B) debit to Bad Debt Expense for $12,200. 
C) debit to Bad Debt Expense for $5,800. 
D) credit to Allowance for Doubtful Accounts for $9,000. 
A) debit to Bad Debt Expense for $9,000. 
B) debit to Bad Debt Expense for $12,200. 
C) debit to Bad Debt Expense for $5,800. 
D) credit to Allowance for Doubtful Accounts for $9,000.

Question 15

When using the direct write-off method, year-end adjustments for bad debt expense must be made.

Accepted Answer

A) True 
 B)False

Question 16

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 have exceeded 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 have exceeded 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 17

The following information is related to December 31, 2021 balances.   During 2022, sales on account were $390,000 and collections on account were $230,000.The company wrote off $22,000 in uncollectible accounts.An analysis of outstanding receivable accounts at year-end indicated that bad debts should be estimated at $144,000.Bad debt expense for 2022 is:

Accepted Answer

A) $46,000. 
B) $24,000. 
C) $144,000. 
D) $ 2,000. 
A) $46,000. 
B) $24,000. 
C) $144,000. 
D) $ 2,000.

Question 18

The allowance method of accounting for uncollectible accounts is required if

Accepted Answer

A) the company makes any credit sales. 
B) bad debts are significant in amount. 
C) the company is a retailer. 
D) the company charges interest on accounts receivable. 
A) the company makes any credit sales. 
B) bad debts are significant in amount. 
C) the company is a retailer. 
D) the company charges interest on accounts receivable.

Question 19

The financial statements of the Nelson Manufacturing Company report net sales of $360,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and the end of the year, respectively.What is the accounts receivable turnover for Nelson?

Accepted Answer

A) 4.5 times 
B) 7.2 times 
C) 12.0 times 
D) 9.0 times 
A) 4.5 times 
B) 7.2 times 
C) 12.0 times 
D) 9.0 times

Question 20

Thompson Corporation's unadjusted trial balance includes the following balances (assume normal balances):   Bad debts are estimated to be 6% of outstanding receivables.What amount of bad debt expense will the company record?

Accepted Answer

A) $119,400 
B) $76,400 
C) $74,270 
D) $114,030 
A) $119,400 
B) $76,400 
C) $74,270 
D) $114,030

The accounts receivable turnover is needed to calculate

Rosen Company receives a $9,000, 3-month, 6% promissory note from Bay Company in settlement of an open accounts receivable.What entry will Rosen Company make upon receiving the note?

If the amount of uncollectible account expense is understated at year end

The direct write-off method of accounting for uncollectible accounts

Allowance for Doubtful Accounts on the balance sheet

When customers make purchases with a national credit card, the retailer

Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $45,000.If the balance of the Allowance for Doubtful Accounts is a $6,000 credit before adjustment, what is the amount of bad debt expense for that period?

All of the following statements regarding the financial statement presentation of receivables are true except:

Receivables are

When a note is dishonored, the payee's entry includes a

YZ Company accepted a national credit card for a $10,000 purchase.The cost of the goods sold is $8,000.The credit card company charges a 3% fee.What is the impact of this transaction on net operating income?

The bookkeeper recorded the following journal entry Which one of the following statements is false?

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

An aging of a company's accounts receivable indicates that $9,000 are estimated to be uncollectible.If Allowance for Doubtful Accounts has a $3,200 debit balance, the adjustment to record bad debts for the period will require a

When using the direct write-off method, year-end adjustments for bad debt expense must be made.

A debit balance in the Allowance for Doubtful Accounts

The allowance method of accounting for uncollectible accounts is required if

The financial statements of the Nelson Manufacturing Company report net sales of $360,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and the end of the year, respectively.What is the accounts receivable turnover for Nelson?

Thompson Corporation's unadjusted trial balance includes the following balances (assume normal balances): Bad debts are estimated to be 6% of outstanding receivables.What amount of bad debt expense will the company record?

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 Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

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Exam 8: Reporting and Analyzing Receivables

The accounts receivable turnover is needed to calculate

Rosen Company receives a $9,000, 3-month, 6% promissory note from Bay Company in settlement of an open accounts receivable.What entry will Rosen Company make upon receiving the note?

If the amount of uncollectible account expense is understated at year end

The direct write-off method of accounting for uncollectible accounts

Allowance for Doubtful Accounts on the balance sheet

When customers make purchases with a national credit card, the retailer

Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $45,000.If the balance of the Allowance for Doubtful Accounts is a $6,000 credit before adjustment, what is the amount of bad debt expense for that period?

All of the following statements regarding the financial statement presentation of receivables are true except:

Receivables are

When a note is dishonored, the payee's entry includes a

YZ Company accepted a national credit card for a $10,000 purchase.The cost of the goods sold is $8,000.The credit card company charges a 3% fee.What is the impact of this transaction on net operating income?

The bookkeeper recorded the following journal entry Which one of the following statements is false?

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

An aging of a company's accounts receivable indicates that $9,000 are estimated to be uncollectible.If Allowance for Doubtful Accounts has a $3,200 debit balance, the adjustment to record bad debts for the period will require a

When using the direct write-off method, year-end adjustments for bad debt expense must be made.

A debit balance in the Allowance for Doubtful Accounts

The allowance method of accounting for uncollectible accounts is required if

The financial statements of the Nelson Manufacturing Company report net sales of $360,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and the end of the year, respectively.What is the accounts receivable turnover for Nelson?

Thompson Corporation's unadjusted trial balance includes the following balances (assume normal balances): Bad debts are estimated to be 6% of outstanding receivables.What amount of bad debt expense will the company record?

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 Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

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