Question 1

Advances to employees are referred to as accounts receivable.

Accepted Answer

A) True 
 B)False

Question 2

When an account is written off using the allowance method, 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 3

The interest rate for a three-month loan would normally be stated in terms of which of the following rates of interest?

Accepted Answer

A)   Daily
B)   Monthly
C)   Quarterly
D)   Annual

Question 4

All of the following statements regarding the financial statement presentation of receivables are true except:

Accepted Answer

A)   Short-term receivables are reported in the current assets section of the balance sheet.
B)   The gross amount of receivables less the allowance for doubtful accounts is equal to the net receivables.
C)   Short-term receivables are reported above the short-term investments in the balance sheet.
D)   Companies report bad debts expense under "Selling Expenses" in the operating expenses section of the income statement.

Question 5

The accounts receivable turnover ratio is computed by dividing total sales by the average net receivables during the year.

Accepted Answer

A) True 
 B)False

Question 6

Accounts receivable are the result of cash and credit sales.

Accepted Answer

A) True 
 B)False

Question 7

The percentage of receivables basis of estimating uncollectible accounts ignores the existing balance in the allowance account when the bad debt adjusting entry is recorded.

Accepted Answer

A) True 
 B)False

Question 8

The following information is related to December 31, 2013 balances.  During 2014 sales on account were $195,000 and collections on account were $115,000. Also, during 2014 the company wrote off $11,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that bad debts should be estimated at $72,000. Bad debt expense for 2014 is:

Accepted Answer

A)   $23,000.
B)   $12,000.
C)   $72,000.
D)   $ 1,000.

Question 9

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.

Question 10

Compute the maturity value as indicated for each of the following notes receivable.

Accepted Answer

1. An $8,000, 6%, 3-month note dated Apr...

Question 11

Interest on a 6-month, 10 percent, $10,000 note is calculated by multiplying $10,000 * 0.10 *6/12.

Accepted Answer

A) True 
 B)False

Question 12

On December 31, 2013, when its Allowance for Doubtful Accounts had a credit balance of $1,500, Leeds Company estimates that 6% of its accounts receivable balance of $95,000 will become uncollectible. On March 3, 2014, Leeds Company determined that Megan Jost's account of $950 was uncollectible. On May 15, 2014, Jost paid the amount previously written off.
Instructions
Prepare the journal entries for December 31, 2013, March 3, 2014 and May 15, 2014.

Accepted Answer

The answer of On December 31, 2013, when its Allowance...

Question 13

Which of the following is a way of disposing of a note receivable?

Accepted Answer

A)   Honoring it on maturity date.
B)   Selling it to receive cash before the maturity date.
C)   Default by the maker.
D)   All of these are ways to dispose of notes receivable.

Question 14

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

Accepted Answer

A)   Depreciating accounts receivable
B)   Recognizing accounts receivable
C)   Valuing accounts receivable
D)   Accelerating cash receipts from accounts receivable

Question 15

Three accounting issues associated with accounts receivable are

Accepted Answer

A)   depreciating, returns, and valuing.
B)   depreciating, valuing, and collecting.
C)   recognizing, valuing, and accelerating collections.
D)   accrual, bad debts, and accelerating collections.

Question 16

Bad Debt Expense is considered

Accepted Answer

A)   an avoidable cost in doing business on a credit basis.
B)   an internal control weakness.
C)   a necessary risk of doing business on a credit basis.
D)   avoidable unless there is a recession.

Question 17

The sale or transfer of accounts receivable in order to raise funds is called

Accepted Answer

A)   pledging.
B)   factoring.
C)   leasing.
D)   collateralizing.

Question 18

An aging of a company's accounts receivable indicates that $4,500 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,200 credit balance, the adjustment to record bad debts for the period will require a

Accepted Answer

A)   debit to Bad Debt Expense for $4,500.
B)   debit to Allowance for Doubtful Accounts for $3,300.
C)   debit to Bad Debt Expense for $3,300.
D)   credit to Allowance for Doubtful Accounts for $4,500.

Question 19

Great Plains Supply Co. has the following transactions related to notes receivable during the last 2 months of the year.
Nov. 1 Loaned $75,000 cash to B. Benson on a 1-year, 8% note.
Dec. 11 Sold goods to Roswell, Inc., receiving a $9,000, 90-day, 7% note.
16 Received a $20,000, 6-month, 9% note to settle an open account from M. Ling.
31 Accrued interest revenue on all notes receivable.
Instructions
Journalize the transactions for Great Plains Supply Co.

Accepted Answer

The answer of Great Plains Supply Co. has the following...

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 8: Reporting and Analyzing Receivables

Compute the maturity value as indicated for each of the following notes receivable.

Correct Answer
verified
1. An $8,000, 6%, 3-month note dated Apr...
View Answer

The accounts receivable turnover ratio is computed by dividing total sales by the average net receivables during the year.

Correct Answer
verified

Accounts receivable are the result of cash and credit sales.

Correct Answer
verified

The percentage of receivables basis of estimating uncollectible accounts ignores the existing balance in the allowance account when the bad debt adjusting entry is recorded.

Correct Answer
verified

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

Correct Answer
verified

Which of the following is a way of disposing of a note receivable?

Correct Answer
verified

All of the following statements regarding the financial statement presentation of receivables are true except:

Correct Answer
verified

Correct Answer
verified

Advances to employees are referred to as accounts receivable.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Three accounting issues associated with accounts receivable are

Correct Answer
verified

The interest rate for a three-month loan would normally be stated in terms of which of the following rates of interest?

Correct Answer
verified

Bad Debt Expense is considered

Correct Answer
verified

Interest on a 6-month, 10 percent, $10,000 note is calculated by multiplying $10,000 * 0.10 *6/12.

Correct Answer
verified

An aging of a company's accounts receivable indicates that $4,500 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,200 credit balance, the adjustment to record bad debts for the period will require a

Correct Answer
verified

Correct Answer
verified

The sale or transfer of accounts receivable in order to raise funds is called

Correct Answer
verified

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

Correct Answer
verified

Exam 8: Reporting and Analyzing Receivables

Compute the maturity value as indicated for each of the following notes receivable.

Correct Answerverified1. An $8,000, 6%, 3-month note dated Apr...View AnswerShow Answer

The accounts receivable turnover ratio is computed by dividing total sales by the average net receivables during the year.

Correct AnswerverifiedShow Answer

Accounts receivable are the result of cash and credit sales.

Correct AnswerverifiedShow Answer

The percentage of receivables basis of estimating uncollectible accounts ignores the existing balance in the allowance account when the bad debt adjusting entry is recorded.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is a way of disposing of a note receivable?

Correct AnswerverifiedShow Answer

All of the following statements regarding the financial statement presentation of receivables are true except:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Advances to employees are referred to as accounts receivable.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Three accounting issues associated with accounts receivable are

Correct AnswerverifiedShow Answer

The interest rate for a three-month loan would normally be stated in terms of which of the following rates of interest?

Correct AnswerverifiedShow Answer

Bad Debt Expense is considered

Correct AnswerverifiedShow Answer

Interest on a 6-month, 10 percent, $10,000 note is calculated by multiplying $10,000 * 0.10 *6/12.

Correct AnswerverifiedShow Answer

An aging of a company's accounts receivable indicates that $4,500 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,200 credit balance, the adjustment to record bad debts for the period will require a

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The sale or transfer of accounts receivable in order to raise funds is called

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified
1. An $8,000, 6%, 3-month note dated Apr...
View Answer

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