Question 1

If the amount of bad debts expense is understated at year end, then

Accepted Answer

A) net income will be understated. 
B) shareholders' equity will be understated. 
C) Allowance for Doubtful Accounts will be overstated. 
D) net Accounts Receivable will be overstated. 
A) net income will be understated. 
B) shareholders' equity will be understated. 
C) Allowance for Doubtful Accounts will be overstated. 
D) net Accounts Receivable will be overstated.

Question 2

Receivables are generally valued and reported in the statement of financial position at their gross amount less the allowance for doubtful accounts.

Accepted Answer

A) True 
 B)False

Question 3

Under the allowance method for uncollectible accounts, when a year-end adjustment is made for estimated uncollectible accounts,

Accepted Answer

A) total assets decrease. 
B) total assets are unchanged. 
C) net income is unchanged. 
D) liabilities decrease. 
A) total assets decrease. 
B) total assets are unchanged. 
C) net income is unchanged. 
D) liabilities decrease.

Question 4

The receivables turnover ratio is used to analyze

Accepted Answer

A) profitability. 
B) liquidity. 
C) risk. 
D) solvency. 
A) profitability. 
B) liquidity. 
C) risk. 
D) solvency.

Question 5

Use the following information for questions 
The financial statements of Andreo Manufacturing Inc.report credit sales of $600,000 and accounts receivable of $60,000 and $40,000 at the beginning of the year and end of the year, respectively.
-What is the average collection period for accounts receivable in days (rounded)?

Accepted Answer

A) 16 
B) 30 
C) 32 
D) 49 
A) 16 
B) 30 
C) 32 
D) 49

Question 6

The total interest owing on a $10,000, 4%, 3-month note receivable is

Accepted Answer

A) $100. 
B) $200. 
C) $400. 
D) $1,200. 
A) $100. 
B) $200. 
C) $400. 
D) $1,200.

Question 7

Trade receivables

Accepted Answer

A) occur when two companies trade or exchange notes receivables. 
B) can be accounts receivable or notes receivable. 
C) include employee advances. 
D) do not result from the operations of the business. 
A) occur when two companies trade or exchange notes receivables. 
B) can be accounts receivable or notes receivable. 
C) include employee advances. 
D) do not result from the operations of the business.

Question 8

Trade receivables

Accepted Answer

A) do not result from the operations of the business. 
B) are employee advance transactions. 
C) are loans to company officers. 
D) are the result of sales transactions. 
A) do not result from the operations of the business. 
B) are employee advance transactions. 
C) are loans to company officers. 
D) are the result of sales transactions.

Question 9

A promissory note

Accepted Answer

A) is not a formal credit instrument. 
B) may be used to settle an account receivable. 
C) requires the money due and owing to be repaid to "the maker". 
D) cannot be factored to another party. 
A) is not a formal credit instrument. 
B) may be used to settle an account receivable. 
C) requires the money due and owing to be repaid to "the maker". 
D) cannot be factored to another party.

Question 10

Bad Debts Expense is reported on the statement of income as

Accepted Answer

A) part of cost of goods sold. 
B) an ammount equal to the allowance for doubtful accounts and presented on the statement of financial position. 
C) an operating expense. 
D) a non-operating expense. 
A) part of cost of goods sold. 
B) an ammount equal to the allowance for doubtful accounts and presented on the statement of financial position. 
C) an operating expense. 
D) a non-operating expense.

Question 11

An aging of accounts receivable schedule is based on the premise that the longer the period an account remains unpaid, the greater the probability that it will eventually be collected.

Accepted Answer

A) True 
 B)False

Question 12

The receivables turnover should be analyzed in conjunction with other ratios such as the current ratio and inventory turnover.

Accepted Answer

A) True 
 B)False

Question 13

Under the allowance method for uncollectible accounts

Accepted Answer

A) the carrying amount of accounts receivable is greater before an account is written off than after it is written off. 
B) Bad Debts Expense is debited when a specific account is written off as uncollectible. 
C) the carrying amount of accounts receivable in the statement of financial position 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 carrying amount of accounts receivable is greater before an account is written off than after it is written off. 
B) Bad Debts Expense is debited when a specific account is written off as uncollectible. 
C) the carrying amount of accounts receivable in the statement of financial position is the same before and after an account is written off. 
D) Allowance for Doubtful Accounts is closed each year to Income Summary.

Question 14

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

Accepted Answer

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

Question 15

Both the gross amount of receivables and the Allowance for Doubtful Accounts must be reported either in the statement of financial position or notes to the financial statements.

Accepted Answer

A) True 
 B)False

Question 16

The receivables turnover ratio is calculated by dividing

Accepted Answer

A) total sales by average gross accounts receivable. 
B) total sales by average net accounts receivable. 
C) credit sales by average gross accounts receivable. 
D) credit sales by ending average net accounts receivable. 
A) total sales by average gross accounts receivable. 
B) total sales by average net accounts receivable. 
C) credit sales by average gross accounts receivable. 
D) credit sales by ending average net accounts receivable.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

An aging of a company's accounts receivable indicates that $11,000 is estimated to be uncollectible.If the Allowance for Doubtful Accounts has a $1,600 debit balance, the adjustment to record bad debts for the period will require a

Accepted Answer

A) debit to Bad Debts Expense for $12,600. 
B) debit to Bad Debts Expense for $11,000. 
C) debit to Bad Debts Expense for $9,400. 
D) debit to Allowance for Doubtful Accounts for $11,000. 
A) debit to Bad Debts Expense for $12,600. 
B) debit to Bad Debts Expense for $11,000. 
C) debit to Bad Debts Expense for $9,400. 
D) debit to Allowance for Doubtful Accounts for $11,000.

Question 19

When an account is written off using the allowance method for uncollectible accounts, the

Accepted Answer

A) carrying amount of total accounts receivable increases. 
B) net accounts receivable decreases. 
C) allowance account increases. 
D) net accounts receivable stay the same. 
A) carrying amount of total accounts receivable increases. 
B) net accounts receivable decreases. 
C) allowance account increases. 
D) net accounts receivable stay the same.

Question 20

The average collection period for receivables is calculated by dividing 365 days by

Accepted Answer

A) credit sales. 
B) average accounts receivable. 
C) ending accounts receivable. 
D) receivables turnover ratio. 
A) credit sales. 
B) average accounts receivable. 
C) ending accounts receivable. 
D) receivables turnover ratio.

If the amount of bad debts expense is understated at year end, then

Receivables are generally valued and reported in the statement of financial position at their gross amount less the allowance for doubtful accounts.

Under the allowance method for uncollectible accounts, when a year-end adjustment is made for estimated uncollectible accounts,

The receivables turnover ratio is used to analyze

The total interest owing on a $10,000, 4%, 3-month note receivable is

Trade receivables

Trade receivables

A promissory note

Bad Debts Expense is reported on the statement of income as

An aging of accounts receivable schedule is based on the premise that the longer the period an account remains unpaid, the greater the probability that it will eventually be collected.

The receivables turnover should be analyzed in conjunction with other ratios such as the current ratio and inventory turnover.

Under the allowance method for uncollectible accounts

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

Both the gross amount of receivables and the Allowance for Doubtful Accounts must be reported either in the statement of financial position or notes to the financial statements.

The receivables turnover ratio is calculated by dividing

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

An aging of a company's accounts receivable indicates that $11,000 is estimated to be uncollectible.If the Allowance for Doubtful Accounts has a $1,600 debit balance, the adjustment to record bad debts for the period will require a

When an account is written off using the allowance method for uncollectible accounts, the

The average collection period for receivables is calculated by dividing 365 days by

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

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Exam 8: Reporting and Analyzing Receivables

If the amount of bad debts expense is understated at year end, then

Receivables are generally valued and reported in the statement of financial position at their gross amount less the allowance for doubtful accounts.

Under the allowance method for uncollectible accounts, when a year-end adjustment is made for estimated uncollectible accounts,

The receivables turnover ratio is used to analyze

The total interest owing on a $10,000, 4%, 3-month note receivable is

Trade receivables

Trade receivables

A promissory note

Bad Debts Expense is reported on the statement of income as

An aging of accounts receivable schedule is based on the premise that the longer the period an account remains unpaid, the greater the probability that it will eventually be collected.

The receivables turnover should be analyzed in conjunction with other ratios such as the current ratio and inventory turnover.

Under the allowance method for uncollectible accounts

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

Both the gross amount of receivables and the Allowance for Doubtful Accounts must be reported either in the statement of financial position or notes to the financial statements.

The receivables turnover ratio is calculated by dividing

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

An aging of a company's accounts receivable indicates that $11,000 is estimated to be uncollectible.If the Allowance for Doubtful Accounts has a $1,600 debit balance, the adjustment to record bad debts for the period will require a

When an account is written off using the allowance method for uncollectible accounts, the

The average collection period for receivables is calculated by dividing 365 days by

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters