Question 1

Night Corp receives a $4,000, 3-month, 8% note from Day Corp in settlement of a past due account receivable. What entry will Night Corp make upon receiving the note?

Accepted Answer

The answer of Night Corp receives a $4,000, 3-month, 8%...

Question 2

The maturity value of an $8,000, 6.5%, 3-month note receivable dated February 10, with interest due at maturity, is

Accepted Answer

A)  $8,000.
B)  $8,065.
C)  $8,130.
D)  $8,520.

Question 3

The net realizable value of the Accounts Receivable is $21,000 before the write-off of a $1,500 account. What is the net realizable value after the write-off?

Accepted Answer

A)  $22,500
B)  $21,000
C)  $19,500
D)  $18,000

Question 4

If a company fails to record estimated bad debts expense, then

Accepted Answer

A)  net realizable value is understated.
B)  expenses are understated.
C)  revenues are understated.
D)  receivables are understated.

Question 5

Accounts receivable are valued and reported on the statement of financial position

Accepted Answer

A)  in the non-current asset section.
B)  at the gross amount less sales returns and allowances.
C)  at net realizable value.
D)  only if they are not past due.

Question 6

Common ways to speed up cash flow from accounts receivable do not include

Accepted Answer

A)  offering customers a discount if they pay earlier than the due date.
B)  borrowing money using accounts receivable as collateral.
C)  accepting bank debit and credit cards in payment.
D)  increasing the payment period from 30 to 45 days.

Question 7

Estimated uncollectibles are recorded as a debit to

Accepted Answer

A)  Allowance for Doubtful Accounts.
B)  Bad Debts Expense.
C)  Sales.
D)  Accounts Receivable.

Question 8

Which of the following is true about the presentation of receivables?

Accepted Answer

A)  Companies must report gross accounts receivable on the statement of financial position.
B)  Companies must report the net realizable value of accounts receivable on the statement of financial position.
C)  Bad debt expense must be reported under non-operating expenses in the income statement.
D)  The allowance for doubtful accounts must be reported in the liabilities section of the statement of financial position.

Question 9

Gray Inc. lends White Ltd. $60,000 on April 1, accepting a 6-month, 4.5% interest note. Interest is due the first of each month, commencing May 1. Gray Inc. prepares financial statements on April 30. What adjusting entry should be made before the financial statements can be prepared?

Accepted Answer

The answer of Gray Inc. lends White Ltd. $60,000 on...

Question 10

Bad Debts Expense is a contra account to the Sales account.

Accepted Answer

A) True 
 B)False

Question 11

A company may sell its accounts receivable to a factor to

Accepted Answer

A)  speed up the collection of accounts receivable.
B)  hide the receivables from creditors.
C)  avoid selling on account.
D)  allow its customers more time to pay their bills.

Question 12

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.

Question 13

The term "receivables" refers to

Accepted Answer

A)  amounts due from individuals or companies.
B)  merchandise to be collected from individuals or companies.
C)  cash to be paid to creditors.
D)  cash to be paid to debtors.

Question 14

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

Accepted Answer

A)  is unchanged and the allowance account increases.
B)  increases and the allowance account increases.
C)  decreases and the allowance account decreases.
D)  decreases and the allowance account increases.

Question 15

A factor is a finance company or bank that buys receivables from businesses for a fee.

Accepted Answer

A) True 
 B)False

Question 16

Which one of the following is not an accounting issue associated with accounts receivable?

Accepted Answer

A)  Depreciating accounts receivable
B)  Recognizing accounts receivable
C)  Valuing accounts receivable
D)  Estimating the amount collectible

Question 17

Writing off an uncollectible account involves

Accepted Answer

A)  a debit to Bad Debts Expense.
B)  a debit to Allowance for Doubtful accounts.
C)  a debit to Sales Returns and Allowances.
D)  a debit to Accounts Receivable.

Question 18

To find the balance due from an individual customer, the accountant would refer to the

Accepted Answer

A)  General Journal.
B)  Sales account in the general ledger.
C)  Accounts Receivable subsidiary ledger.
D)  Accounts Receivable account in the general ledger.

Question 19

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

Accepted Answer

A)  profit 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 20

Accounts receivable can be the result of either cash or credit sales.

Accepted Answer

A) True 
 B)False

Exam 8: Reporting and Analyzing Receivables

If a company fails to record estimated bad debts expense, then

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A company may sell its accounts receivable to a factor to

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The net realizable value of the Accounts Receivable is $21,000 before the write-off of a $1,500 account. What is the net realizable value after the write-off?

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Common ways to speed up cash flow from accounts receivable do not include

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A factor is a finance company or bank that buys receivables from businesses for a fee.

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To find the balance due from an individual customer, the accountant would refer to the

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Accounts receivable are valued and reported on the statement of financial position

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The maturity value of an $8,000, 6.5%, 3-month note receivable dated February 10, with interest due at maturity, is

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Gray Inc. lends White Ltd. $60,000 on April 1, accepting a 6-month, 4.5% interest note. Interest is due the first of each month, commencing May 1. Gray Inc. prepares financial statements on April 30. What adjusting entry should be made before the financial statements can be prepared?

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Writing off an uncollectible account involves

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Estimated uncollectibles are recorded as a debit to

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Night Corp receives a $4,000, 3-month, 8% note from Day Corp in settlement of a past due account receivable. What entry will Night Corp make upon receiving the note?

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Which one of the following is not an accounting issue associated with accounts receivable?

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Which of the following is true about the presentation of receivables?

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

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Bad Debts Expense is a contra account to the Sales account.

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

Correct AnswerverifiedShow Answer

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

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The term "receivables" refers to

Correct AnswerverifiedShow Answer

Accounts receivable can be the result of either cash or credit sales.

Correct AnswerverifiedShow Answer

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