Question 1

The materiality constraint, as applied to bad debts:

Accepted Answer

A) Permits the use of the direct write-off method when bad debts expenses are relatively small. 
B) Requires use of the allowance method for bad debts. 
C) Requires use of the direct write-off method. 
D) Requires that bad debts not be written off. 
E) Requires that expenses be reported in the same period as the sales they helped produce. 
A) Permits the use of the direct write-off method when bad debts expenses are relatively small. 
B) Requires use of the allowance method for bad debts. 
C) Requires use of the direct write-off method. 
D) Requires that bad debts not be written off. 
E) Requires that expenses be reported in the same period as the sales they helped produce.

Question 2

A company had the following items and amounts in its unadjusted trial balance as of December 31 of the current year:   Prepare the adjusting entry to estimate bad debts assuming an aging analysis estimates that 8% of the outstanding accounts receivable will be uncollectible.

Accepted Answer

The answer of A company had the following items and...

Question 3

The advantage of the allowance method of accounting for bad debts is that it identifies the specific customers who will not pay their bills.

Accepted Answer

A) True 
 B)False

Question 4

A high accounts receivable turnover in comparison with competitors suggests that the firm should tighten its credit policy.

Accepted Answer

A) True 
 B)False

Question 5

If a 90-day note receivable is dated July 12, what is the maturity date of the note?

Accepted Answer

July = 31 - 12 = 19 days, Augu

Question 6

A company had net sales of $600,000, total sales of $750,000, and an average accounts receivable of $75,000. Its accounts receivable turnover equals:

Accepted Answer

A) .13 
B) .80 
C) 7.75 
D) 8.00 
E) 10.00 
A) .13 
B) .80 
C) 7.75 
D) 8.00 
E) 10.00

Question 7

A company uses the aging of accounts receivable method to estimate its bad debts expense. On December 31 of the current year an aging analysis of accounts receivable revealed the following:   Required:
a. Calculate the amount of the Allowance for Doubtful Accounts that should be reported on the current year-end balance sheet.
b. Calculate the amount of the Bad Debts Expense that should be reported on the current year's income statement, assuming that the balance of the Allowance for Doubtful Accounts on January 1 of the current year was $41,000 and that accounts receivable written off during the current year totaled $43,200.
c. Prepare the adjusting entry to record bad debts expense on December 31 of the current year.
d. Show how Accounts Receivable will appear on the current year-end balance sheet as of December 31.

Accepted Answer

The answer of A company uses the aging of accounts...

The materiality constraint, as applied to bad debts:

A company had the following items and amounts in its unadjusted trial balance as of December 31 of the current year: Prepare the adjusting entry to estimate bad debts assuming an aging analysis estimates that 8% of the outstanding accounts receivable will be uncollectible.

The advantage of the allowance method of accounting for bad debts is that it identifies the specific customers who will not pay their bills.

A high accounts receivable turnover in comparison with competitors suggests that the firm should tighten its credit policy.

If a 90-day note receivable is dated July 12, what is the maturity date of the note?

A company had net sales of $600,000, total sales of $750,000, and an average accounts receivable of $75,000. Its accounts receivable turnover equals:

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

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Exam 7: Reporting and Analyzing Receivables

The materiality constraint, as applied to bad debts:

A company had the following items and amounts in its unadjusted trial balance as of December 31 of the current year: Prepare the adjusting entry to estimate bad debts assuming an aging analysis estimates that 8% of the outstanding accounts receivable will be uncollectible.

The advantage of the allowance method of accounting for bad debts is that it identifies the specific customers who will not pay their bills.

A high accounts receivable turnover in comparison with competitors suggests that the firm should tighten its credit policy.

If a 90-day note receivable is dated July 12, what is the maturity date of the note?

A company had net sales of $600,000, total sales of $750,000, and an average accounts receivable of $75,000. Its accounts receivable turnover equals:

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters