Question 1

Notes receivable represent claims for which formal instruments of credit are issued as evidence of debt.

Accepted Answer

A) True 
 B)False

Question 2

Other receivables include nontrade receivables such as loans to company officers.

Accepted Answer

A) True 
 B)False

Question 3

The accounts receivable turnover ratio is computed by using two accounts reported on the statement of financial position, accounts receivable and allowance for doubtful accounts.

Accepted Answer

A) True 
 B)False

Question 4

Trade accounts receivable are valued and reported on the statement of financial position

Accepted Answer

A)  in the investment section.
B)  at gross amounts less sales returns and allowances.
C)  at net realizable value.
D)  only if they are not past due.E) B) and D)
F) All of the above

Question 5

Notes or accounts receivables that result from sales transactions are often called

Accepted Answer

A)  sales receivables.
B)  non-trade receivables.
C)  trade receivables.
D)  merchandise receivables.E) B) and D)
F) All of the above

Question 6

An alternative name for Bad Debts Expense is

Accepted Answer

A)  Deadbeat Expense.
B)  Uncollectible Accounts Expense.
C)  Collection Expense.
D)  Credit Loss Expense.E) All of the above
F) A) and C)

Question 7

When an account becomes uncollectible and must be written off,

Accepted Answer

A)  Allowance for Doubtful Accounts should be credited.
B)  Accounts Receivable should be credited.
C)  Bad Debts Expense should be credited.
D)  Sales should be debited.E) None of the above
F) A) and C)

Question 8

If a company uses the allowance method to account for uncollectible accounts, the entry to write off an uncollectible account only involves statement of financial position accounts.

Accepted Answer

A) True 
 B)False

Question 9

To record estimated uncollectible accounts using the allowance method, the adjusting entry would be a

Accepted Answer

A)  debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts.
B)  debit to Bad Debts Expense and a credit to Allowance for Doubtful Accounts.
C)  debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable.
D)  debit to Loss on Credit Sales and a credit to Accounts Receivable.E) A) and B)
F) A) and C)

Question 10

A reasonable amount of uncollectible accounts is evidence

Accepted Answer

A)  that the credit policy is too strict.
B)  that the credit policy is too lenient.
C)  of a sound credit policy.
D)  of poor judgments on the part of the credit manager.E) None of the above
F) B) and C)

Question 11

When the due date of a note is stated in months, the time factor in computing interest is the number of months divided by 360 days.

Accepted Answer

A) True 
 B)False

Question 12

Using the allowance method, the uncollectible accounts for the year is estimated to be $28,000.If the balance for the Allowance for Doubtful Accounts is a $7,000 debit before adjustment, what is the amount of bad debts expense for the period?

Accepted Answer

A)  $7,000
B)  $21,000
C)  $28,000
D)  $35,000E) C) and D)
F) B) and D)

Question 13

An aging of a company's accounts receivable indicates that $9,000 are estimated to be uncollectible.If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a

Accepted Answer

A)  debit to Bad Debts Expense for $9,000.
B)  debit to Allowance for Doubtful Accounts for $7,900.
C)  debit to Bad Debts Expense for $7,900.
D)  credit to Allowance for Doubtful Accounts for $9,000.E) A) and B)
F) A) and C)

Question 14

The receivable that is usually evidenced by a formal instrument of credit is a(n)

Accepted Answer

A)  trade receivable.
B)  note receivable.
C)  accounts receivable.
D)  income tax receivable.E) B) and C)
F) A) and D)

Question 15

The value associated with a dishonored note receivable removed from the statement of financial position since the note is no longer negotiable.

Accepted Answer

A) True 
 B)False

Question 16

Receivables may be sold because they may be the only reasonable source of cash.

Accepted Answer

A) True 
 B)False

Question 17

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.E) A) and D)
F) None of the above

Question 18

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.E) A) and C)
F) All of the above

Question 19

An aging schedule is prepared only for old accounts receivables that have been past due for more than one year.

Accepted Answer

A) True 
 B)False

Question 20

Under the direct write-off method, no attempt is made to match bad debts expense to sales revenues in the same accounting period.

Accepted Answer

A) True 
 B)False

Exam 8: Accounting for Receivables

When the due date of a note is stated in months, the time factor in computing interest is the number of months divided by 360 days.

Correct AnswerverifiedShow Answer

Using the allowance method, the uncollectible accounts for the year is estimated to be $28,000.If the balance for the Allowance for Doubtful Accounts is a $7,000 debit before adjustment, what is the amount of bad debts expense for the period?

Correct AnswerverifiedShow Answer

Notes or accounts receivables that result from sales transactions are often called

Correct AnswerverifiedShow Answer

The accounts receivable turnover ratio is computed by using two accounts reported on the statement of financial position, accounts receivable and allowance for doubtful accounts.

Correct AnswerverifiedShow Answer

A reasonable amount of uncollectible accounts is evidence

Correct AnswerverifiedShow Answer

The value associated with a dishonored note receivable removed from the statement of financial position since the note is no longer negotiable.

Correct AnswerverifiedShow Answer

Under the direct write-off method, no attempt is made to match bad debts expense to sales revenues in the same accounting period.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a company uses the allowance method to account for uncollectible accounts, the entry to write off an uncollectible account only involves statement of financial position accounts.

Correct AnswerverifiedShow Answer

An aging schedule is prepared only for old accounts receivables that have been past due for more than one year.

Correct AnswerverifiedShow Answer

Other receivables include nontrade receivables such as loans to company officers.

Correct AnswerverifiedShow Answer

The term "receivables" refers to

Correct AnswerverifiedShow Answer

An aging of a company's accounts receivable indicates that $9,000 are estimated to be uncollectible.If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a

Correct AnswerverifiedShow Answer

Trade accounts receivable are valued and reported on the statement of financial position

Correct AnswerverifiedShow Answer

Notes receivable represent claims for which formal instruments of credit are issued as evidence of debt.

Correct AnswerverifiedShow Answer

The receivable that is usually evidenced by a formal instrument of credit is a(n)

Correct AnswerverifiedShow Answer

An alternative name for Bad Debts Expense is

Correct AnswerverifiedShow Answer

To record estimated uncollectible accounts using the allowance method, the adjusting entry would be a

Correct AnswerverifiedShow Answer

When an account becomes uncollectible and must be written off,

Correct AnswerverifiedShow Answer

Receivables may be sold because they may be the only reasonable source of cash.

Correct AnswerverifiedShow Answer

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