Question 1

The basic formula for computing interest on an interest-bearing note is the face value of note x annual interest rate x time in terms of one year.

Accepted Answer

A) True 
 B)False

Question 2

The direct write-off method of recognizing uncollectible accounts is not in accordance with good accounting practice.

Accepted Answer

A) True 
 B)False

Question 3

The interest on a $20,000, 6%, 60-day note receivable is

Accepted Answer

A) $1,200. 
B) $200. 
C) $400. 
D) $600. 
A) $1,200. 
B) $200. 
C) $400. 
D) $600.

Question 4

A note receivable is a written promise by the maker to the payee to pay a specified amount of money at a definite time.

Accepted Answer

A) True 
 B)False

Question 5

Advances to employees are referred to as accounts receivable.

Accepted Answer

A) True 
 B)False

Question 6

Three accounting issues associated with accounts receivable are

Accepted Answer

A) depreciating, returns, and valuing. 
B) depreciating, valuing, and collecting. 
C) recognizing, valuing, and accelerating collections. 
D) accrual, bad debts, and accelerating collections. 
A) depreciating, returns, and valuing. 
B) depreciating, valuing, and collecting. 
C) recognizing, valuing, and accelerating collections. 
D) accrual, bad debts, and accelerating collections.

Question 7

Which of the following is not
 true regarding a promissory note?

Accepted Answer

A) Promissory notes may not be transferred to another party by endorsement. 
B) Promissory notes may be sold to another party. 
C) Promissory notes give a stronger legal claim to the holder than accounts receivable. 
D) Promissory notes may be bearer notes and not specifically identify the payee by name. 
A) Promissory notes may not be transferred to another party by endorsement. 
B) Promissory notes may be sold to another party. 
C) Promissory notes give a stronger legal claim to the holder than accounts receivable. 
D) Promissory notes may be bearer notes and not specifically identify the payee by name.

Question 8

When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when

Accepted Answer

A) a sale is made. 
B) an account becomes bad and is written off. 
C) management estimates the amount of uncollectible accounts. 
D) a customer's account becomes past due. 
A) a sale is made. 
B) an account becomes bad and is written off. 
C) management estimates the amount of uncollectible accounts. 
D) a customer's account becomes past due.

Question 9

A promissory note

Accepted Answer

A) is not a formal credit instrument. 
B) may be used to settle accounts receivable. 
C) has the party to whom the money is due as the maker. 
D) cannot be factored (sold) to another party. 
A) is not a formal credit instrument. 
B) may be used to settle accounts receivable. 
C) has the party to whom the money is due as the maker. 
D) cannot be factored (sold) to another party.

Question 10

The face value of a note refers to the amount

Accepted Answer

A) that can be received if sold to a factor. 
B) borrowed plus interest received at maturity from the maker. 
C) at which the note receivable is recorded. 
D) remaining after a service charge has been deducted. 
A) that can be received if sold to a factor. 
B) borrowed plus interest received at maturity from the maker. 
C) at which the note receivable is recorded. 
D) remaining after a service charge has been deducted.

Question 11

If a retailer regularly sells its receivables to a factor, the service charge of the factor should be classified as a(n)

Accepted Answer

A) operating expense. 
B) interest expense. 
C) other expense. 
D) contra asset. 
A) operating expense. 
B) interest expense. 
C) other expense. 
D) contra asset.

Question 12

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 13

If a promissory note is dishonored, the payee should not record interest income.

Accepted Answer

A) True 
 B)False

Question 14

Under the direct write-off method, no attempt is made to match bad debt expense to sales revenues in the same accounting period.

Accepted Answer

A) True 
 B)False

Question 15

Accounts Receivable are usually the least significant type of claim held by a company.

Accepted Answer

A) True 
 B)False

Question 16

The two key parties to a note are the maker and the payee.

Accepted Answer

A) True 
 B)False

Question 17

Barber Company lends Monroe Company $40,000 on April 1, accepting a four-month, 6% interest note.Barber Company prepares financial statements on April 30.What adjusting entry should be made before the financial statements can be prepared?

Accepted Answer

The answer of Barber Company lends Monroe Company $40,000 on...

Question 18

If a company has a significant concentration of credit risk, it is not required to discuss that in its notes to its financial statements as that could increase the related risk.

Accepted Answer

A) True 
 B)False

Question 19

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 debit before adjustment, what is the balance after adjustment?

Accepted Answer

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

Question 20

When using the allowance method, bad debt expense is recorded when an individual customer defaults.

Accepted Answer

A) True 
 B)False

The basic formula for computing interest on an interest-bearing note is the face value of note x annual interest rate x time in terms of one year.

The direct write-off method of recognizing uncollectible accounts is not in accordance with good accounting practice.

The interest on a $20,000, 6%, 60-day note receivable is

A note receivable is a written promise by the maker to the payee to pay a specified amount of money at a definite time.

Advances to employees are referred to as accounts receivable.

Three accounting issues associated with accounts receivable are

Which of the following is not true regarding a promissory note?

When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when

A promissory note

The face value of a note refers to the amount

If a retailer regularly sells its receivables to a factor, the service charge of the factor should be classified as a(n)

The term "receivables" refers to

If a promissory note is dishonored, the payee should not record interest income.

Under the direct write-off method, no attempt is made to match bad debt expense to sales revenues in the same accounting period.

Accounts Receivable are usually the least significant type of claim held by a company.

The two key parties to a note are the maker and the payee.

Barber Company lends Monroe Company $40,000 on April 1, accepting a four-month, 6% interest note.Barber Company prepares financial statements on April 30.What adjusting entry should be made before the financial statements can be prepared?

If a company has a significant concentration of credit risk, it is not required to discuss that in its notes to its financial statements as that could increase the related risk.

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 debit before adjustment, what is the balance after adjustment?

When using the allowance method, bad debt expense is recorded when an individual customer defaults.

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

Exam 8: Reporting and Analyzing Receivables

The basic formula for computing interest on an interest-bearing note is the face value of note x annual interest rate x time in terms of one year.

The direct write-off method of recognizing uncollectible accounts is not in accordance with good accounting practice.

The interest on a $20,000, 6%, 60-day note receivable is

A note receivable is a written promise by the maker to the payee to pay a specified amount of money at a definite time.

Advances to employees are referred to as accounts receivable.

Three accounting issues associated with accounts receivable are

Which of the following is not true regarding a promissory note?

When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when

A promissory note

The face value of a note refers to the amount

If a retailer regularly sells its receivables to a factor, the service charge of the factor should be classified as a(n)

The term "receivables" refers to

If a promissory note is dishonored, the payee should not record interest income.

Under the direct write-off method, no attempt is made to match bad debt expense to sales revenues in the same accounting period.

Accounts Receivable are usually the least significant type of claim held by a company.

The two key parties to a note are the maker and the payee.

Barber Company lends Monroe Company $40,000 on April 1, accepting a four-month, 6% interest note.Barber Company prepares financial statements on April 30.What adjusting entry should be made before the financial statements can be prepared?

If a company has a significant concentration of credit risk, it is not required to discuss that in its notes to its financial statements as that could increase the related risk.

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 debit before adjustment, what is the balance after adjustment?

When using the allowance method, bad debt expense is recorded when an individual customer defaults.

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