Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Leary Corporation had net credit sales during the year of $900,000 and cost of goods sold of $540,000. The balance in receivables 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)  6.0 
B)  7.5 
C)  5.0 
D)  3.6 
A)  6.0 
B)  7.5 
C)  5.0 
D)  3.6

Question 3

Thompson Corporation's unadjusted trial balance includes the following balances (assume normal balances): - Accounts receivable $\quad\quad\quad \$ 1,492,000 $
- Allowance for doubtful accounts $ \quad\$ 28,400 $ Bad debts are estimated to be 6% of outstanding receivables. What amount of bad debt expense will the company record?

Accepted Answer

A)  $89,520 
B)  $61,120 
C)  $59,416 
D)  $91,224 
A)  $89,520 
B)  $61,120 
C)  $59,416 
D)  $91,224

Question 4

IFRS

Accepted Answer

A)  implies that receivables with different characteristics should be reported separately. 
B)  requires that receivables with different characteristics should be reported separately. 
C)  implies that receivables with different characteristics should be reported as one unsegregated amount. 
D)  requires that receivables with different characteristics should be reported as one unsegregated amount. 
A)  implies that receivables with different characteristics should be reported separately. 
B)  requires that receivables with different characteristics should be reported separately. 
C)  implies that receivables with different characteristics should be reported as one unsegregated amount. 
D)  requires that receivables with different characteristics should be reported as one unsegregated amount.

Question 5

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

Accepted Answer

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

Question 6

An alternative name for Bad Debt Expense is

Accepted Answer

A)  Deadbeat Expense. 
B)  Uncollectible Accounts Expense. 
C)  Collection Expense. 
D)  Credit Loss Expense. 
A)  Deadbeat Expense. 
B)  Uncollectible Accounts Expense. 
C)  Collection Expense. 
D)  Credit Loss Expense.

Question 7

When the due date of a note is stated in months, the time factor in computing interest is the number of months divided by 360 days.

Accepted Answer

A) True 
 B)False

Question 8

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles

Accepted Answer

A)  will increase income in the period it is collected. 
B)  will decrease income in the period it is collected. 
C)  requires a correcting entry for the period in which the account was written off. 
D)  does not affect income in the period it is collected. 
A)  will increase income in the period it is collected. 
B)  will decrease income in the period it is collected. 
C)  requires a correcting entry for the period in which the account was written off. 
D)  does not affect income in the period it is collected.

Question 9

When an account receivable that was previously written off is collected, it is first necessary to reverse the entry to reinstate the customer's account before recording the collection.

Accepted Answer

A) True 
 B)False

Question 10

Under the allowance method of accounting for bad debts, why must uncollectible accounts receivable be estimated at the end of the accounting period?

Accepted Answer

A)  To allow the collection department to schedule work for the next accounting period. 
B)  To determine the gross realizable value of accounts receivable. 
C)  The IRS rules require the company to make the estimate. 
D)  To match bad debt expense to the period in which the revenues were earned. 
A)  To allow the collection department to schedule work for the next accounting period. 
B)  To determine the gross realizable value of accounts receivable. 
C)  The IRS rules require the company to make the estimate. 
D)  To match bad debt expense to the period in which the revenues were earned.

Question 11

Which of the following receivables would not be classified as an "other receivable"?

Accepted Answer

A)  Advance to an employee 
B)  Refundable income tax 
C)  Notes receivable 
D)  Interest receivable 
A)  Advance to an employee 
B)  Refundable income tax 
C)  Notes receivable 
D)  Interest receivable

Question 12

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

Question 13

An inexperienced accountant made the following entries. In each case, the explanation to the entry is correct. 
  
Instructions
Prepare the correcting entries.

Accepted Answer

The answer of An inexperienced accountant made the following entries....

Question 14

On January 10 Donna Stark uses her Baver Co. credit card to purchase merchandise from Baver Co. for $2,600. On February 10, she is billed for the amount due of $2,600. On February 12 Stark pays $1,600 on the balance due. On March 10 Stark is billed for the amount due, including interest at 1% per month on the unpaid balance as of February 12.
Instructions
Prepare the entries on Baver Co.'s books related to the transactions that occurred on January 10, February 12, and March 10.

Accepted Answer

The answer of On January 10 Donna Stark uses her...

Question 15

The percentage of receivables basis for estimating uncollectible accounts emphasizes

Accepted Answer

A)  cash realizable value. 
B)  the relationship between accounts receivable and bad debts expense. 
C)  income statement relationships. 
D)  the relationship between sales and accounts receivable. 
A)  cash realizable value. 
B)  the relationship between accounts receivable and bad debts expense. 
C)  income statement relationships. 
D)  the relationship between sales and accounts receivable.

Question 16

The financial statements of the Phelps Manufacturing Company reports net sales of $500,000 and accounts receivable of $80,000 and $40,000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for Phelps?

Accepted Answer

A)  8.3 times 
B)  12.5 times 
C)  6.3 times 
D)  4.2 times 
A)  8.3 times 
B)  12.5 times 
C)  6.3 times 
D)  4.2 times

Question 17

The accounts receivable turnover is computed by dividing

Accepted Answer

A)  total sales by average receivables. 
B)  total sales by ending receivables. 
C)  net credit sales by average receivables. 
D)  net credit sales by ending receivables. 
A)  total sales by average receivables. 
B)  total sales by ending receivables. 
C)  net credit sales by average receivables. 
D)  net credit sales by ending receivables.

Question 18

The financial statements of the Nelson Manufacturing Company reports net sales of $300,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for Nelson?

Accepted Answer

A)  3.8 times 
B)  6 times 
C)  10.0 times 
D)  7.5 times 
A)  3.8 times 
B)  6 times 
C)  10.0 times 
D)  7.5 times

Question 19

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 20

In 2014 the Golic Co. had net credit sales of $600,000. On January 1, 2014, the Allowance for Doubtful Accounts had a credit balance of $15,000. During 2014, $24,000 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 $160,000 what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2014?

Accepted Answer

A)  $16,000. 
B)  $25,000. 
C)  $31,000. 
D)  $24,000. 
A)  $16,000. 
B)  $25,000. 
C)  $31,000. 
D)  $24,000.

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

Leary Corporation had net credit sales during the year of $900,000 and cost of goods sold of $540,000. The balance in receivables 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?

IFRS

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

An alternative name for Bad Debt Expense is

When the due date of a note is stated in months, the time factor in computing interest is the number of months divided by 360 days.

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles

When an account receivable that was previously written off is collected, it is first necessary to reverse the entry to reinstate the customer's account before recording the collection.

Under the allowance method of accounting for bad debts, why must uncollectible accounts receivable be estimated at the end of the accounting period?

Which of the following receivables would not be classified as an "other receivable"?

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

An inexperienced accountant made the following entries. In each case, the explanation to the entry is correct. Instructions Prepare the correcting entries.

The percentage of receivables basis for estimating uncollectible accounts emphasizes

The financial statements of the Phelps Manufacturing Company reports net sales of $500,000 and accounts receivable of $80,000 and $40,000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for Phelps?

The accounts receivable turnover is computed by dividing

The financial statements of the Nelson Manufacturing Company reports net sales of $300,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for Nelson?

The face value of a note refers to the amount

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 and Acquisitions in Accounting

Filters

Exam 8: Reporting and Analyzing Receivables

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

Leary Corporation had net credit sales during the year of $900,000 and cost of goods sold of $540,000. The balance in receivables 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?

IFRS

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

An alternative name for Bad Debt Expense is

When the due date of a note is stated in months, the time factor in computing interest is the number of months divided by 360 days.

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles

When an account receivable that was previously written off is collected, it is first necessary to reverse the entry to reinstate the customer's account before recording the collection.

Under the allowance method of accounting for bad debts, why must uncollectible accounts receivable be estimated at the end of the accounting period?

Which of the following receivables would not be classified as an "other receivable"?

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

An inexperienced accountant made the following entries. In each case, the explanation to the entry is correct. Instructions Prepare the correcting entries.

The percentage of receivables basis for estimating uncollectible accounts emphasizes

The financial statements of the Phelps Manufacturing Company reports net sales of $500,000 and accounts receivable of $80,000 and $40,000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for Phelps?

The accounts receivable turnover is computed by dividing

The financial statements of the Nelson Manufacturing Company reports net sales of $300,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for Nelson?

The face value of a note refers to the amount

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 and Acquisitions in Accounting

Filters