Question 1

Allowance for Doubtful Accounts is a contra account that is deducted from Accounts Receivable on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 2

The net amount expected to be received in cash from receivables is termed the

Accepted Answer

A) cash realizable value. 
B) cash-good value. 
C) gross cash value. 
D) cash-equivalent value. 
A) cash realizable value. 
B) cash-good value. 
C) gross cash value. 
D) cash-equivalent value.

Question 3

M.Cornett is a corporation that sells breakfast cereal.Based on the accounts listed below, what are M.Cornett's total trade receivables?

Accepted Answer

A) $10,000 
B) $12,000 
C) $11,000 
D) $12,900 
A) $10,000 
B) $12,000 
C) $11,000 
D) $12,900

Question 4

You have just received notice that a customer of yours with an account receivable balance of $100 has gone bankrupt and will not make any future payments.Assuming you use the allowance method, the entry you make is to

Accepted Answer

A) debit Allowance for Doubtful Accounts and credit Bad Debt Expense. 
B) debit Allowance for Doubtful Accounts and credit Accounts Receivable. 
C) debit Bad Debt Expense and credit Allowance for Doubtful Accounts. 
D) debit Bad Debt Expense and credit Accounts Receivable. 
A) debit Allowance for Doubtful Accounts and credit Bad Debt Expense. 
B) debit Allowance for Doubtful Accounts and credit Accounts Receivable. 
C) debit Bad Debt Expense and credit Allowance for Doubtful Accounts. 
D) debit Bad Debt Expense and credit Accounts Receivable.

Question 5

The two key parties to a promissory note are the

Accepted Answer

A) maker and a bank. 
B) debtor and the payee. 
C) maker and the payee. 
D) sender and the receiver. 
A) maker and a bank. 
B) debtor and the payee. 
C) maker and the payee. 
D) sender and the receiver.

Question 6

Accounts receivable are valued and reported on the balance sheet

Accepted Answer

A) in the investments section. 
B) at gross amounts less sales returns and allowances. 
C) at cash realizable value. 
D) only if they are not past due. 
A) in the investments section. 
B) at gross amounts less sales returns and allowances. 
C) at cash realizable value. 
D) only if they are not past due.

Question 7

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.The change in the cash realizable value from the balance at 12/31/21 to 12/31/22 was

Accepted Answer

A) $136,000 increase. 
B) $160,000 increase. 
C) $114,000 increase. 
D) $138,000 increase. 
A) $136,000 increase. 
B) $160,000 increase. 
C) $114,000 increase. 
D) $138,000 increase.

Question 8

The interest on a $10,000, 10%, 1-year note receivable is

Accepted Answer

A) $10,000. 
B) $1,000. 
C) $11,000. 
D) $10,900. 
A) $10,000. 
B) $1,000. 
C) $11,000. 
D) $10,900.

Question 9

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

Accepted Answer

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

Question 10

A dishonored note is a note that is not paid in full at maturity.

Accepted Answer

A) True 
 B)False

Question 11

A high accounts receivable turnover ratio indicates

Accepted Answer

A) the company's sales are increasing. 
B) a large proportion of the company's sales are on credit. 
C) customers are making payments very quickly. 
D) customers are making payments slowly. 
A) the company's sales are increasing. 
B) a large proportion of the company's sales are on credit. 
C) customers are making payments very quickly. 
D) customers are making payments slowly.

Question 12

To record estimated uncollectible accounts using the allowance method, the adjusting entry would be a

Accepted Answer

A) debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts. 
B) debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts. 
C) debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable. 
D) debit to Loss on Credit Sales and a credit to Accounts Receivable. 
A) debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts. 
B) debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts. 
C) debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable. 
D) debit to Loss on Credit Sales and a credit to Accounts Receivable.

Question 13

Which one of the following is not a principle of sound accounts receivable management?

Accepted Answer

A) Determine to whom to extend credit. 
B) Delay cash receipts from receivables if necessary. 
C) Monitor collections. 
D) Determine a payment period. 
A) Determine to whom to extend credit. 
B) Delay cash receipts from receivables if necessary. 
C) Monitor collections. 
D) Determine a payment period.

Question 14

On January 15, Nifty Company sells merchandise on account to Martinez Associates for $5,000 with terms 3/10, n/30.On January 20, Martinez returns merchandise worth $1,000 to Nifty.On January 24, payment is received from Martinez for the balance due.What is the amount of cash received?

Accepted Answer

A) $4,000 
B) $3,880 
C) $3,850 
D) $2,800 
A) $4,000 
B) $3,880 
C) $3,850 
D) $2,800

Question 15

In computing the maturity date of a note, the date the note is issued is included but the due date is omitted.

Accepted Answer

A) True 
 B)False

Question 16

The interest on a $15,000, 6%, 60-day note receivable is

Accepted Answer

A) $75. 
B) $900 
C) $450. 
D) $150. 
A) $75. 
B) $900 
C) $450. 
D) $150.

Question 17

Schofield Retailers accepted $40,000 of Silver Bank MasterCard credit card charges for merchandise sold on August 1.Silver Bank charges 4% for its credit card use.The entry to record this transaction by Schofield Retailers will include a credit to Sales Revenue of $40,000 and a debit to (or debits to)

Accepted Answer

A) Cash for $38,400 and Service Charge Expense for $1,600. 
B) Accounts receivable for $38,400 and Service Charge Expense for $2,400. 
C) Cash for $40,000. 
D) Accounts Receivable for $40,000. 
A) Cash for $38,400 and Service Charge Expense for $1,600. 
B) Accounts receivable for $38,400 and Service Charge Expense for $2,400. 
C) Cash for $40,000. 
D) Accounts Receivable for $40,000.

Question 18

Trade receivables can be an account receivable or a note receivable.

Accepted Answer

A) True 
 B)False

Question 19

Smithson 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) $67,140 
B) $45,840 
C) $44,562 
D) $68,418 
A) $67,140 
B) $45,840 
C) $44,562 
D) $68,418

Question 20

A note receivable is a negotiable instrument which

Accepted Answer

A) eliminates the need for a bad debts allowance. 
B) can be transferred to another party by endorsement. 
C) takes the place of checks in a business firm. 
D) can only be collected by a bank. 
A) eliminates the need for a bad debts allowance. 
B) can be transferred to another party by endorsement. 
C) takes the place of checks in a business firm. 
D) can only be collected by a bank.

Allowance for Doubtful Accounts is a contra account that is deducted from Accounts Receivable on the balance sheet.

The net amount expected to be received in cash from receivables is termed the

M.Cornett is a corporation that sells breakfast cereal.Based on the accounts listed below, what are M.Cornett's total trade receivables?

You have just received notice that a customer of yours with an account receivable balance of $100 has gone bankrupt and will not make any future payments.Assuming you use the allowance method, the entry you make is to

The two key parties to a promissory note are the

Accounts receivable are valued and reported on the balance sheet

The interest on a $10,000, 10%, 1-year note receivable is

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

A dishonored note is a note that is not paid in full at maturity.

A high accounts receivable turnover ratio indicates

To record estimated uncollectible accounts using the allowance method, the adjusting entry would be a

Which one of the following is not a principle of sound accounts receivable management?

On January 15, Nifty Company sells merchandise on account to Martinez Associates for $5,000 with terms 3/10, n/30.On January 20, Martinez returns merchandise worth $1,000 to Nifty.On January 24, payment is received from Martinez for the balance due.What is the amount of cash received?

In computing the maturity date of a note, the date the note is issued is included but the due date is omitted.

The interest on a $15,000, 6%, 60-day note receivable is

Trade receivables can be an account receivable or a note receivable.

Smithson 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?

A note receivable is a negotiable instrument which

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

Allowance for Doubtful Accounts is a contra account that is deducted from Accounts Receivable on the balance sheet.

The net amount expected to be received in cash from receivables is termed the

M.Cornett is a corporation that sells breakfast cereal.Based on the accounts listed below, what are M.Cornett's total trade receivables?

You have just received notice that a customer of yours with an account receivable balance of $100 has gone bankrupt and will not make any future payments.Assuming you use the allowance method, the entry you make is to

The two key parties to a promissory note are the

Accounts receivable are valued and reported on the balance sheet

The interest on a $10,000, 10%, 1-year note receivable is

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

A dishonored note is a note that is not paid in full at maturity.

A high accounts receivable turnover ratio indicates

To record estimated uncollectible accounts using the allowance method, the adjusting entry would be a

Which one of the following is not a principle of sound accounts receivable management?

On January 15, Nifty Company sells merchandise on account to Martinez Associates for $5,000 with terms 3/10, n/30.On January 20, Martinez returns merchandise worth $1,000 to Nifty.On January 24, payment is received from Martinez for the balance due.What is the amount of cash received?

In computing the maturity date of a note, the date the note is issued is included but the due date is omitted.

The interest on a $15,000, 6%, 60-day note receivable is

Trade receivables can be an account receivable or a note receivable.

Smithson 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?

A note receivable is a negotiable instrument which

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

Filters