Question 1

A major advantage of national credit cards to retailers is that there is no charge to the retailer by the credit card companies for their services.

Accepted Answer

A) True 
 B)False

Question 2

Doane Company receives a $10,000, 3-month, 6% promissory note from Ray Company in settlement of an open accounts receivable.What entry will Doane Company make upon receiving the note?

Accepted Answer

The answer of Doane Company receives a $10,000, 3-month, 6%...

Question 3

Cash realizable value is determined by subtracting Allowance for Doubtful Accounts from Net Sales.

Accepted Answer

A) True 
 B)False

Question 4

Notes or accounts receivables that result from sales transactions are often called

Accepted Answer

A) sales receivables. 
B) non-trade receivables. 
C) trade receivables. 
D) merchandise receivables. 
A) sales receivables. 
B) non-trade receivables. 
C) trade receivables. 
D) merchandise receivables.

Question 5

Under the accounts receivable aging method, the balance in Allowance for Doubtful Accounts must be considered prior to adjusting for estimated uncollectible accounts.

Accepted Answer

A) True 
 B)False

Question 6

Under the allowance method of accounting for uncollectible accounts,

Accepted Answer

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

Question 7

The interest on a $15,000, 6%, 90-day note receivable is

Accepted Answer

A) $900. 
B) $450. 
C) $225. 
D) $675. 
A) $900. 
B) $450. 
C) $225. 
D) $675.

Question 8

In the table below the information for four companies is provided.   Assuming all four companies are in the same industry, which company appears to have the greatest likelihood of paying its current obligations?

Accepted Answer

A) Martin 
B) Lewis 
C) Danforth 
D) Garner 
A) Martin 
B) Lewis 
C) Danforth 
D) Garner

Question 9

The maturity value of a $60,000, 9%, 40-day note receivable dated July 3 is

Accepted Answer

A) $60,000. 
B) $66,000. 
C) $65,400. 
D) $60,600. 
A) $60,000. 
B) $66,000. 
C) $65,400. 
D) $60,600.

Question 10

Bad Debt 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 11

The accounts receivable turnover

Accepted Answer

A) is computed by dividing net credit sales for the accounting period by the cash realizable value of accounts receivable on the last day of the accounting period. 
B) can be used to compute the average collection period. 
C) is a method of evaluating the solvency of net accounts receivable. 
D) is only important to internal users of accounting information. 
A) is computed by dividing net credit sales for the accounting period by the cash realizable value of accounts receivable on the last day of the accounting period. 
B) can be used to compute the average collection period. 
C) is a method of evaluating the solvency of net accounts receivable. 
D) is only important to internal users of accounting information.

Question 12

An aging schedule is prepared only for accounts receivables that have been past due for more than one year.

Accepted Answer

A) True 
 B)False

Question 13

Leary Corporation had net credit sales during the year of $1,200,000 and cost of goods sold of $720,000.The balance in accounts receivable at the beginning of the year was $120,000 and at the end of the year was $180,000.What was the accounts receivable turnover?

Accepted Answer

A) 8.0 
B) 10.0 
C) 6.7 
D) 4.8 
A) 8.0 
B) 10.0 
C) 6.7 
D) 4.8

Question 14

When the allowance method is used to account for bad debts, the write-off of an account receivable results in an expense at the time of write-off.

Accepted Answer

A) True 
 B)False

Question 15

The Allowance for Doubtful Accounts is necessary because

Accepted Answer

A) when recording uncollectible accounts 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 uncollectible accounts 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 16

The Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible.

Accepted Answer

A) True 
 B)False

Question 17

The financial statements of the Melton 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 average collection period for accounts receivable in days?

Accepted Answer

A) 81.1 
B) 40.6 
C) 50.7 
D) 30.4 
A) 81.1 
B) 40.6 
C) 50.7 
D) 30.4

Question 18

Two methods of accounting for uncollectible accounts are the

Accepted Answer

A) allowance method and the accrual method. 
B) allowance method and the net realizable method. 
C) direct write-off method and the accrual method. 
D) direct write-off method and the allowance method. 
A) allowance method and the accrual method. 
B) allowance method and the net realizable method. 
C) direct write-off method and the accrual method. 
D) direct write-off method and the allowance method.

Question 19

A write off of specific accounts receivable under the allowance method

Accepted Answer

A) increases bad debt expense for the accounting period. 
B) should occur on the last day of the accounting period. 
C) decreases the cash realizable value of accounts receivable. 
D) should be formally approved by an authorized employee. 
A) increases bad debt expense for the accounting period. 
B) should occur on the last day of the accounting period. 
C) decreases the cash realizable value of accounts receivable. 
D) should be formally approved by an authorized employee.

Question 20

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

Accepted Answer

A) liability. 
B) contra account to Bad Debt Expense. 
C) expense. 
D) contra account to Accounts Receivable. 
A) liability. 
B) contra account to Bad Debt Expense. 
C) expense. 
D) contra account to Accounts Receivable.

A major advantage of national credit cards to retailers is that there is no charge to the retailer by the credit card companies for their services.

Doane Company receives a $10,000, 3-month, 6% promissory note from Ray Company in settlement of an open accounts receivable.What entry will Doane Company make upon receiving the note?

Cash realizable value is determined by subtracting Allowance for Doubtful Accounts from Net Sales.

Notes or accounts receivables that result from sales transactions are often called

Under the accounts receivable aging method, the balance in Allowance for Doubtful Accounts must be considered prior to adjusting for estimated uncollectible accounts.

Under the allowance method of accounting for uncollectible accounts,

The interest on a $15,000, 6%, 90-day note receivable is

In the table below the information for four companies is provided. Assuming all four companies are in the same industry, which company appears to have the greatest likelihood of paying its current obligations?

The maturity value of a $60,000, 9%, 40-day note receivable dated July 3 is

Bad Debt Expense is considered

The accounts receivable turnover

An aging schedule is prepared only for accounts receivables that have been past due for more than one year.

Leary Corporation had net credit sales during the year of $1,200,000 and cost of goods sold of $720,000.The balance in accounts receivable at the beginning of the year was $120,000 and at the end of the year was $180,000.What was the accounts receivable turnover?

When the allowance method is used to account for bad debts, the write-off of an account receivable results in an expense at the time of write-off.

The Allowance for Doubtful Accounts is necessary because

The Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible.

The financial statements of the Melton 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 average collection period for accounts receivable in days?

Two methods of accounting for uncollectible accounts are the

A write off of specific accounts receivable under the allowance method

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

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

A major advantage of national credit cards to retailers is that there is no charge to the retailer by the credit card companies for their services.

Doane Company receives a $10,000, 3-month, 6% promissory note from Ray Company in settlement of an open accounts receivable.What entry will Doane Company make upon receiving the note?

Cash realizable value is determined by subtracting Allowance for Doubtful Accounts from Net Sales.

Notes or accounts receivables that result from sales transactions are often called

Under the accounts receivable aging method, the balance in Allowance for Doubtful Accounts must be considered prior to adjusting for estimated uncollectible accounts.

Under the allowance method of accounting for uncollectible accounts,

The interest on a $15,000, 6%, 90-day note receivable is

In the table below the information for four companies is provided. Assuming all four companies are in the same industry, which company appears to have the greatest likelihood of paying its current obligations?

The maturity value of a $60,000, 9%, 40-day note receivable dated July 3 is

Bad Debt Expense is considered

The accounts receivable turnover

An aging schedule is prepared only for accounts receivables that have been past due for more than one year.

Leary Corporation had net credit sales during the year of $1,200,000 and cost of goods sold of $720,000.The balance in accounts receivable at the beginning of the year was $120,000 and at the end of the year was $180,000.What was the accounts receivable turnover?

When the allowance method is used to account for bad debts, the write-off of an account receivable results in an expense at the time of write-off.

The Allowance for Doubtful Accounts is necessary because

The Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible.

The financial statements of the Melton 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 average collection period for accounts receivable in days?

Two methods of accounting for uncollectible accounts are the

A write off of specific accounts receivable under the allowance method

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

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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