Question 1

The direct write-off method of accounting for bad debts records the loss from an uncollectible account receivable when it is determined to be uncollectible.

Accepted Answer

A) True 
 B)False

Question 2

All of the following statements regarding valuation of receivables under U.S. GAAP and IFRS are true except:

Accepted Answer

A) Both require the allowance method for uncollectibles unless uncollectibles are immaterial. 
B) Both require that receivables be reported net of estimated collectibles. 
C) Both require that the expenses for estimated collectibles be recorded in the same period revenues generated from those receivables are recorded. 
D) Both allow using percent of sales, percent of receivables, or aging of receivables to estimate uncollectibles. 
E) Both require that the expense related to uncollectibles be recorded when the receivable is determined to be uncollectible. 
A) Both require the allowance method for uncollectibles unless uncollectibles are immaterial. 
B) Both require that receivables be reported net of estimated collectibles. 
C) Both require that the expenses for estimated collectibles be recorded in the same period revenues generated from those receivables are recorded. 
D) Both allow using percent of sales, percent of receivables, or aging of receivables to estimate uncollectibles. 
E) Both require that the expense related to uncollectibles be recorded when the receivable is determined to be uncollectible.

Question 3

The percent of sales method for bad debts estimation uses only income statement account balances to estimate bad debts.

Accepted Answer

A) True 
 B)False

Question 4

Sellers generally prefer to receive notes receivable rather than accounts receivable when the credit period is long and the receivable is for a large amount.

Accepted Answer

A) True 
 B)False

Question 5

A receivable is an amount due from another party.

Accepted Answer

A) True 
 B)False

Question 6

A company had net sales of $550,000 and an average accounts receivable of $110,000. Its accounts receivable turnover equals 5.0.
Accounts Receivable Turnover = Net Sales/Average Accounts Receivable
Accounts Receivable Turnover = $550,000/$110,000 = 5.0

Accepted Answer

A) True 
 B)False

Question 7

The ________________________ method of computing uncollectible accounts use balance sheet relations to estimate bad debts-mainly the relation between accounts receivable and the allowance amount.

Accepted Answer

The answer of The ________________________ method of computing uncollectible accounts...

Question 8

MacKenzie Company sold $180 of merchandise to a customer who used a Regional Bank credit card. Regional Bank deducts a 4% service charge for sales on its credit cards. MacKenzie electronically remits the credit card sales receipts to the credit card company and receives payment in approximately 5 days. The journal entry to record this sale transaction would be:

Accepted Answer

A) Debit Cash of $180 and credit Sales $180. 
B) Debit Cash of $180 and credit Accounts Receivable-Regional $180. 
C) Debit Accounts Receivable-Regional $172.80; debit Credit Card Expense $7.20 and credit Sales $180. 
D) Debit Cash $172.80; debit Credit Card Expense $7.20 and credit Sales $180. 
E) Debit Cash $172.80 and credit Sales $172.80. 
A) Debit Cash of $180 and credit Sales $180. 
B) Debit Cash of $180 and credit Accounts Receivable-Regional $180. 
C) Debit Accounts Receivable-Regional $172.80; debit Credit Card Expense $7.20 and credit Sales $180. 
D) Debit Cash $172.80; debit Credit Card Expense $7.20 and credit Sales $180. 
E) Debit Cash $172.80 and credit Sales $172.80.

Question 9

Describe how accounts receivable arise and how they accounted for, including the use of a subsidiary ledger and an allowance account.

Accepted Answer

Accounts receivable arise from credit sa

Question 10

Explain the difference between honoring and dishonoring a note receivable.

Accepted Answer

When a note is honored, the ma

Question 11

Flack Company receives a $20,000, 8%, 180 day note receivable from a customer. The total interest on this note is $1,600.
$20,000 × .08 × 180/360 = $800

Accepted Answer

A) True 
 B)False

Question 12

Morgan had net sales of $310,000 and average accounts receivable of $75,600. Its competitor, Stanley, had net sales of $290,000 and average accounts receivables of $61,350. Calculate the accounts receivable turnover for both companies. Which company is doing a better job of managing its accounts receivables?

Accepted Answer

Accounts Receivable Turnover = Net Sales

Question 13

Mullis Company sold merchandise on account to a customer for $625, terms n/30. The journal entry to record this sale transaction would be:

Accepted Answer

A) Debit Cash of $625 and credit Sales $625. 
B) Debit Cash of $625 and credit Accounts Receivable $625. 
C) Debit Accounts Receivable $625 and credit Sales $625. 
D) Debit Accounts Receivable $625 and credit Cash $625. 
E) Debit Sales $625 and credit Accounts Receivable $625. 
A) Debit Cash of $625 and credit Sales $625. 
B) Debit Cash of $625 and credit Accounts Receivable $625. 
C) Debit Accounts Receivable $625 and credit Sales $625. 
D) Debit Accounts Receivable $625 and credit Cash $625. 
E) Debit Sales $625 and credit Accounts Receivable $625.

Question 14

A Company had net sales of $23,000 million, and its average account receivables were $5,700 million. Its accounts receivable turnover is 0.24.
Accounts Receivable Turnover = Net Sales/Average Accounts Receivable
Accounts Receivable Turnover = $23,000/$5,700 = 4.0

Accepted Answer

A) True 
 B)False

Question 15

A company receives a 10%, 120-day note for $1,500. The total interest due on the maturity date is:

Accepted Answer

A) $50.00. 
B) $150.00. 
C) $75.00. 
D) $37.50. 
E) $87.50. 
A) $50.00. 
B) $150.00. 
C) $75.00. 
D) $37.50. 
E) $87.50.

Question 16

Define a note receivable and explain how to calculate the interest due on a short-term note receivable.

Accepted Answer

A note receivable is a promissory note,

Question 17

A company reports the following results in its financial statements:   Calculate the company accounts receivable turnover for Year 2 and Year 3. Compare these two results and give a possible explanation for any significant change.

Accepted Answer

Year 2: Accounts receivable turnover:
$2

Question 18

A company ages its accounts receivables to determine its end of period adjustment for bad debts. At the end of the current year, management estimated that $15,750 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a debit balance of $375. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 19

Stacey Corp. uses the direct write-off method to account for bad debts. On May 26 the company determines that a customer account with a balance of $750 is uncollectible. The journal entry to record this loss is:

Accepted Answer

A) Debit Bad Debts Expense $750 and credit Accounts Receivable $750. 
B) Debit Accounts Receivable $750 and credit Accounts Payable $750. 
C) Debit Bad Debts Expense $750 and credit Accounts Payable $750. 
D) Debit Allowance for Doubtful Accounts $750 and credit Accounts Receivable $750. 
E) Debit Bad Debt Expense $750 and credit Allowance for Doubtful Accounts $750. 
A) Debit Bad Debts Expense $750 and credit Accounts Receivable $750. 
B) Debit Accounts Receivable $750 and credit Accounts Payable $750. 
C) Debit Bad Debts Expense $750 and credit Accounts Payable $750. 
D) Debit Allowance for Doubtful Accounts $750 and credit Accounts Receivable $750. 
E) Debit Bad Debt Expense $750 and credit Allowance for Doubtful Accounts $750.

Question 20

The accounts receivable turnover indicates how often, on average, accounts receivable are received and collected during the period.

Accepted Answer

A) True 
 B)False

The direct write-off method of accounting for bad debts records the loss from an uncollectible account receivable when it is determined to be uncollectible.

All of the following statements regarding valuation of receivables under U.S. GAAP and IFRS are true except:

The percent of sales method for bad debts estimation uses only income statement account balances to estimate bad debts.

Sellers generally prefer to receive notes receivable rather than accounts receivable when the credit period is long and the receivable is for a large amount.

A receivable is an amount due from another party.

A company had net sales of $550,000 and an average accounts receivable of $110,000. Its accounts receivable turnover equals 5.0. Accounts Receivable Turnover = Net Sales/Average Accounts Receivable Accounts Receivable Turnover = $550,000/$110,000 = 5.0

The ________________________ method of computing uncollectible accounts use balance sheet relations to estimate bad debts-mainly the relation between accounts receivable and the allowance amount.

Describe how accounts receivable arise and how they accounted for, including the use of a subsidiary ledger and an allowance account.

Explain the difference between honoring and dishonoring a note receivable.

Flack Company receives a $20,000, 8%, 180 day note receivable from a customer. The total interest on this note is $1,600. $20,000 × .08 × 180/360 = $800

Mullis Company sold merchandise on account to a customer for $625, terms n/30. The journal entry to record this sale transaction would be:

A Company had net sales of $23,000 million, and its average account receivables were $5,700 million. Its accounts receivable turnover is 0.24. Accounts Receivable Turnover = Net Sales/Average Accounts Receivable Accounts Receivable Turnover = $23,000/$5,700 = 4.0

A company receives a 10%, 120-day note for $1,500. The total interest due on the maturity date is:

Define a note receivable and explain how to calculate the interest due on a short-term note receivable.

A company reports the following results in its financial statements: Calculate the company accounts receivable turnover for Year 2 and Year 3. Compare these two results and give a possible explanation for any significant change.

Stacey Corp. uses the direct write-off method to account for bad debts. On May 26 the company determines that a customer account with a balance of $750 is uncollectible. The journal entry to record this loss is:

The accounts receivable turnover indicates how often, on average, accounts receivable are received and collected during the period.

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

Exam 7: Reporting and Analyzing Receivables

The direct write-off method of accounting for bad debts records the loss from an uncollectible account receivable when it is determined to be uncollectible.

All of the following statements regarding valuation of receivables under U.S. GAAP and IFRS are true except:

The percent of sales method for bad debts estimation uses only income statement account balances to estimate bad debts.

Sellers generally prefer to receive notes receivable rather than accounts receivable when the credit period is long and the receivable is for a large amount.

A receivable is an amount due from another party.

A company had net sales of $550,000 and an average accounts receivable of $110,000. Its accounts receivable turnover equals 5.0. Accounts Receivable Turnover = Net Sales/Average Accounts Receivable Accounts Receivable Turnover = $550,000/$110,000 = 5.0

The ________________________ method of computing uncollectible accounts use balance sheet relations to estimate bad debts-mainly the relation between accounts receivable and the allowance amount.

Describe how accounts receivable arise and how they accounted for, including the use of a subsidiary ledger and an allowance account.

Explain the difference between honoring and dishonoring a note receivable.

Flack Company receives a $20,000, 8%, 180 day note receivable from a customer. The total interest on this note is $1,600. $20,000 × .08 × 180/360 = $800

Mullis Company sold merchandise on account to a customer for $625, terms n/30. The journal entry to record this sale transaction would be:

A Company had net sales of $23,000 million, and its average account receivables were $5,700 million. Its accounts receivable turnover is 0.24. Accounts Receivable Turnover = Net Sales/Average Accounts Receivable Accounts Receivable Turnover = $23,000/$5,700 = 4.0

A company receives a 10%, 120-day note for $1,500. The total interest due on the maturity date is:

Define a note receivable and explain how to calculate the interest due on a short-term note receivable.

A company reports the following results in its financial statements: Calculate the company accounts receivable turnover for Year 2 and Year 3. Compare these two results and give a possible explanation for any significant change.

Stacey Corp. uses the direct write-off method to account for bad debts. On May 26 the company determines that a customer account with a balance of $750 is uncollectible. The journal entry to record this loss is:

The accounts receivable turnover indicates how often, on average, accounts receivable are received and collected during the period.

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