Question 1

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 2

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

Question 3

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.

Question 4

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.

Question 5

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.

Question 6

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.

Question 7

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.

Question 8

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.

Question 9

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.

Question 10

The receivables turnover ratio is used to analyze

Accepted Answer

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

Question 11

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.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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 14

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 15

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 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.

Question 17

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.

Question 18

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.

Question 19

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 20

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.

Exam 8: Reporting and Analyzing Receivables

Trade receivables

Correct Answer
verified

Trade receivables

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

The receivables turnover ratio is calculated by dividing

Correct Answer
verified

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

Correct Answer
verified

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.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Bad Debts Expense is reported on the statement of income as

Correct Answer
verified

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.

Correct Answer
verified

A promissory note

Correct Answer
verified

The receivables turnover ratio is used to analyze

Correct Answer
verified

Under the allowance method for uncollectible accounts

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Exam 8: Reporting and Analyzing Receivables

Trade receivables

Correct AnswerverifiedShow Answer

Trade receivables

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The receivables turnover ratio is calculated by dividing

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Bad Debts Expense is reported on the statement of income as

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

A promissory note

Correct AnswerverifiedShow Answer

The receivables turnover ratio is used to analyze

Correct AnswerverifiedShow Answer

Under the allowance method for uncollectible accounts

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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