Question 1

Under the allowance method, when a specific account is written off

Accepted Answer

A) total assets will be unchanged. 
B) net income will decrease. 
C) total assets will decrease. 
D) total assets will increase. 
A) total assets will be unchanged. 
B) net income will decrease. 
C) total assets will decrease. 
D) total assets will increase.

Question 2

Under the allowance method, writing off an uncollectible account

Accepted Answer

A) affects only balance sheet accounts. 
B) affects both balance sheet and income statement accounts. 
C) affects only income statement accounts. 
D) is not an acceptable practice. 
A) affects only balance sheet accounts. 
B) affects both balance sheet and income statement accounts. 
C) affects only income statement accounts. 
D) is not an acceptable practice.

Question 3

All of the following statements are true regarding the average collection period except:

Accepted Answer

A) it is a popular variant of the accounts receivable turnover. 
B) it is used to assess the effectiveness of a company's credit and collection policies. 
C) it should generally exceed the credit term period. 
D) its increase may suggest a decline in the financial health of customers. 
A) it is a popular variant of the accounts receivable turnover. 
B) it is used to assess the effectiveness of a company's credit and collection policies. 
C) it should generally exceed the credit term period. 
D) its increase may suggest a decline in the financial health of customers.

Question 4

In a promissory note, the party to whom payment is to be made is called the maker.

Accepted Answer

A) True 
 B)False

Question 5

Accounts receivable are one of a company's least liquid assets.

Accepted Answer

A) True 
 B)False

Question 6

Windsor Corporation sells its goods on terms of 2/10, n/30.It has an accounts receivable turnover of 6.What is its average collection period (days)?

Accepted Answer

A) 90 
B) 40 
C) 61 
D) 48 
A) 90 
B) 40 
C) 61 
D) 48

Question 7

If a company sells its accounts receivables to a factor

Accepted Answer

A) the seller pays a commission to the factor. 
B) the factor pays a commission to the seller. 
C) there is a gain on the sale of the receivables. 
D) the seller defers recognition of sales revenue until the account is collected. 
A) the seller pays a commission to the factor. 
B) the factor pays a commission to the seller. 
C) there is a gain on the sale of the receivables. 
D) the seller defers recognition of sales revenue until the account is collected.

Question 8

Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $55,000.If the balance of the Allowance for Doubtful Accounts is an $11,000 debit before adjustment, what is the balance after adjustment?

Accepted Answer

A) $55,000 
B) $11,000 
C) $66,000 
D) $44,000 
A) $55,000 
B) $11,000 
C) $66,000 
D) $44,000

Question 9

A 90-day note dated June 30, 2022 would mature on:

Accepted Answer

A) September 30, 2022. 
B) September 27, 2022. 
C) September 28, 2022. 
D) September 29, 2022. 
A) September 30, 2022. 
B) September 27, 2022. 
C) September 28, 2022. 
D) September 29, 2022.

Question 10

If a company uses the allowance method to account for uncollectible accounts, the entry to write off an uncollectible account involves only balance sheet accounts.

Accepted Answer

A) True 
 B)False

Question 11

Young Company lends Dobson industries $40,000 on August 1, 2022, accepting a 9-month, 9% interest note.If Young prepares its financial statements as of December 31, 2022, what adjusting entry must it make?.

Accepted Answer

The answer of Young Company lends Dobson industries $40,000 on...

Question 12

Both accounts receivable and notes receivable represent claims expected to be collected in cash.

Accepted Answer

A) True 
 B)False

Question 13

The holder of a note adjusts for accrued interest by debiting Interest Receivable and crediting Interest Revenue.

Accepted Answer

A) True 
 B)False

Question 14

In 2022, the Golic Co.had net credit sales of $900,000.On January 1, 2022, the Allowance for Doubtful Accounts had a credit balance of $22,500.During 2022, $36,000 of uncollectible accounts receivable were written off.Past experience indicates that the allowance should be 10% of the balance in receivables (percentage-of-receivables basis).If the accounts receivable balance at December 31 was $240,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2022?

Accepted Answer

A) $24,000. 
B) $37,500. 
C) $46,500. 
D) $36,000. 
A) $24,000. 
B) $37,500. 
C) $46,500. 
D) $36,000.

Question 15

Simonic Retailers accepted $80,000 of Citibank Visa credit card charges for merchandise sold on July 1.Citibank charges 4% for its credit card use.The entry to record this transaction by Simonic Retailers will include a credit to Sales Revenue of $80,000 and a debit to (or debits to)

Accepted Answer

A) Cash $76,800 and Service Charge Expense $3,200. 
B) Accounts Receivable $76,800 and Service Charge Expense $3,200. 
C) Cash $76,800 and Interest Expense $3,200. 
D) Accounts Receivable $80,000. 
A) Cash $76,800 and Service Charge Expense $3,200. 
B) Accounts Receivable $76,800 and Service Charge Expense $3,200. 
C) Cash $76,800 and Interest Expense $3,200. 
D) Accounts Receivable $80,000.

Question 16

The following information is related to December 31, 2021 balances.   During 2022, sales on account were $870,000 and collections on account were $516,000.The company wrote off $48,000 in uncollectible accounts.An analysis of outstanding receivable accounts at year-end indicated that bad debts should be estimated at $324,000.Bad debt expense for 2022 is

Accepted Answer

A) $102,000. 
B) $ 54,000. 
C) $324,000. 
D) $ 6,000. 
A) $102,000. 
B) $ 54,000. 
C) $324,000. 
D) $ 6,000.

Question 17

Kinsler Company uses the percentage-of-receivables method for recording bad debt expense.The Accounts Receivable balance is $250,000 and credit sales are $1,000,000.Management estimates that 6% of accounts receivable will be uncollectible.What adjusting entry will Kinsler Company make if the Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment

Accepted Answer

The answer of Kinsler Company uses the percentage-of-receivables method for...

Question 18

Under the direct write-off method of accounting for uncollectible accounts, Bad Debt Expense is debited

Accepted Answer

A) when a credit sale is past due. 
B) at the end of each accounting period. 
C) whenever a pre-determined amount of credit sales have been made. 
D) when an account is determined to be uncollectible. 
A) when a credit sale is past due. 
B) at the end of each accounting period. 
C) whenever a pre-determined amount of credit sales have been made. 
D) when an account is determined to be uncollectible.

Question 19

An analysis and aging of the accounts receivable of Watts Company at December 31 reveal these data:   What is the cash realizable value of the accounts receivable at December 31 after adjustment?

Accepted Answer

A) $2,740,000 
B) $3,000,000 
C) $3,200,000 
D) $2,940,000 
A) $2,740,000 
B) $3,000,000 
C) $3,200,000 
D) $2,940,000

Question 20

Under the allowance method, Bad Debt Expense is debited when an account is deemed uncollectible and must be written off.

Accepted Answer

A) True 
 B)False

Under the allowance method, when a specific account is written off

Under the allowance method, writing off an uncollectible account

All of the following statements are true regarding the average collection period except:

In a promissory note, the party to whom payment is to be made is called the maker.

Accounts receivable are one of a company's least liquid assets.

Windsor Corporation sells its goods on terms of 2/10, n/30.It has an accounts receivable turnover of 6.What is its average collection period (days)?

If a company sells its accounts receivables to a factor

Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $55,000.If the balance of the Allowance for Doubtful Accounts is an $11,000 debit before adjustment, what is the balance after adjustment?

A 90-day note dated June 30, 2022 would mature on:

If a company uses the allowance method to account for uncollectible accounts, the entry to write off an uncollectible account involves only balance sheet accounts.

Young Company lends Dobson industries $40,000 on August 1, 2022, accepting a 9-month, 9% interest note.If Young prepares its financial statements as of December 31, 2022, what adjusting entry must it make?.

Both accounts receivable and notes receivable represent claims expected to be collected in cash.

The holder of a note adjusts for accrued interest by debiting Interest Receivable and crediting Interest Revenue.

Simonic Retailers accepted $80,000 of Citibank Visa credit card charges for merchandise sold on July 1.Citibank charges 4% for its credit card use.The entry to record this transaction by Simonic Retailers will include a credit to Sales Revenue of $80,000 and a debit to (or debits to)

Under the direct write-off method of accounting for uncollectible accounts, Bad Debt Expense is debited

An analysis and aging of the accounts receivable of Watts Company at December 31 reveal these data: What is the cash realizable value of the accounts receivable at December 31 after adjustment?

Under the allowance method, Bad Debt Expense is debited when an account is deemed uncollectible and must be written off.

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

Under the allowance method, when a specific account is written off

Under the allowance method, writing off an uncollectible account

All of the following statements are true regarding the average collection period except:

In a promissory note, the party to whom payment is to be made is called the maker.

Accounts receivable are one of a company's least liquid assets.

Windsor Corporation sells its goods on terms of 2/10, n/30.It has an accounts receivable turnover of 6.What is its average collection period (days)?

If a company sells its accounts receivables to a factor

Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $55,000.If the balance of the Allowance for Doubtful Accounts is an $11,000 debit before adjustment, what is the balance after adjustment?

A 90-day note dated June 30, 2022 would mature on:

If a company uses the allowance method to account for uncollectible accounts, the entry to write off an uncollectible account involves only balance sheet accounts.

Young Company lends Dobson industries $40,000 on August 1, 2022, accepting a 9-month, 9% interest note.If Young prepares its financial statements as of December 31, 2022, what adjusting entry must it make?.

Both accounts receivable and notes receivable represent claims expected to be collected in cash.

The holder of a note adjusts for accrued interest by debiting Interest Receivable and crediting Interest Revenue.

Simonic Retailers accepted $80,000 of Citibank Visa credit card charges for merchandise sold on July 1.Citibank charges 4% for its credit card use.The entry to record this transaction by Simonic Retailers will include a credit to Sales Revenue of $80,000 and a debit to (or debits to)

Under the direct write-off method of accounting for uncollectible accounts, Bad Debt Expense is debited

An analysis and aging of the accounts receivable of Watts Company at December 31 reveal these data: What is the cash realizable value of the accounts receivable at December 31 after adjustment?

Under the allowance method, Bad Debt Expense is debited when an account is deemed uncollectible and must be written off.

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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