Question 1

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

Accepted Answer

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

Question 2

A company has $90,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 4% of outstanding receivables are uncollectible. The current balance (before adjustments) in the allowance for doubtful accounts is an $800 debit. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:

Accepted Answer

A)  $3,632
B)  $3,568
C)  $3,600
D)  $4,400
E)  $2,800F) None of the above
G) B) and C)

Question 3

A note that the maker is unable or refuses to pay at maturity is called a dishonored note.

Accepted Answer

A) True 
 B)False

Question 4

A maker who dishonors a note is one who does not pay it at maturity.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts:   Accounts receivable $375,000 debit  Allowance for unco llectible accounts 500 credit  Net Sales 800,000 credit \begin{array}{ll}	ext { Accounts receivable } & \$ 375,000 	ext { debit } \	ext { Allowance for unco llectible accounts } & 500 	ext { credit } \	ext { Net Sales } & 800,000 	ext { credit }\end{array} Accounts receivable  Allowance for unco llectible accounts  Net Sales ​$375,000 debit 500 credit 800,000 credit ​  All sales are made on credit. Based on past experience, the company estimates 0.6% of net credit sales to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Accepted Answer

A)  Debit Bad Debts Expense $4,300; credit Allowance for Doubtful Accounts $4,300.
B)  Debit Bad Debts Expense $4,800; credit Allowance for Doubtful Accounts $4,800.
C)  Debit Bad Debts Expense $5,300; credit Allowance for Doubtful Accounts $5,300.
D)  Debit Bad Debts Expense $2,630; credit Allowance for Doubtful Accounts $2,630.
E)  Debit Bad Debts Expense $2,130; credit Allowance for Doubtful Accounts $2,130. F) All of the above
G) D) and E)

Question 7

What are some of the considerations management should make when assessing the accounts receivable turnover ratio?

Accepted Answer

Since the accounts receivable turnover r...

Question 8

A Company had net sales of $23,000, and its average account receivables were $5,700. Its accounts receivable turnover is 0.24.

Accepted Answer

A) True 
 B)False

Question 9

The materiality constraint, as applied to bad debts:

Accepted Answer

A)  Requires that bad debts not be written off.
B)  Requires use of the direct write-off method.
C)  Requires use of the allowance method for bad debts.
D)  Requires that expenses be reported in the same period as the sales they helped produce.
E)  Permits the use of the direct write-off method when bad debts expenses are relatively small.F) D) and E)
G) C) and D)

Question 10

Jax Recording Studio purchased $7,800 in electronic components from Music World. Jax signed a 60-day, 8% promissory note for $7,800. Music World's journal entry to record the sales transaction is:

Accepted Answer

A)  Debit Notes Receivable $7,800; debit Interest Receivable $104; credit Sales $7,904
B)  Debit Notes Receivable $7,904; credit Sales $7,904
C)  Debit Notes Receivable $7,800; credit Sales $7,800
D)  Debit Accounts Receivable $7,800; credit Sales $7,800
E)  Debit Accounts Receivable $7,904; credit Sales $7,904F) C) and D)
G) A) and B)

Question 11

A credit sale of $5,275 to a customer would result in which of the following?

Accepted Answer

A)  A credit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable subsidiary ledger.
B)  A debit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable subsidiary ledger.
C)  A credit to Sales and a credit to the customer's account in the accounts receivable subsidiary ledger.
D)  A credit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable subsidiary ledger.
E)  A debit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable subsidiary ledger.F) A) and C)
G) All of the above

Question 12

MacKenzie Company sold $300 of merchandise to a customer who used a Regional Bank credit card. Regional Bank deducts a 1.5% service charge for sales on its credit cards and credits MacKenzie's account immediately when sales are made. The journal entry to record this sale transaction would be:

Accepted Answer

A)  Debit Cash of $300 and credit Accounts Receivable $300.
B)  Debit Cash $295.50 and credit Sales $295.50.
C)  Debit Cash $295.50; debit Credit Card Expense $4.50 and credit Sales $300.
D)  Debit Cash of $300 and credit Sales $300.
E)  Debit Accounts Receivable $300 and credit Sales $300.F) All of the above
G) A) and D)

Question 13

The accounts receivable turnover is calculated by:

Accepted Answer

A)  Dividing average accounts receivable by net sales and multiplying by 365.
B)  Dividing net income by average accounts receivable.
C)  Dividing net sales by average accounts receivable and multiplying by 365.
D)  Dividing net sales by average accounts receivable.
E)  Dividing average accounts receivable by net sales.F) A) and C)
G) A) and E)

Question 14

When using the allowance method of accounting for uncollectible accounts, the entry to write off Jeannie's uncollectible account is a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable-Jeannie.

Accepted Answer

A) True 
 B)False

Question 15

A company has net sales of $1,200,000 and average accounts receivable of $400,000. What is its accounts receivable turnover for the period?

Accepted Answer

A)  5.00
B)  3.0
C)  20.0
D)  73.0
E)  0.33F) A) and C)
G) C) and D)

Question 16

The notes receivable account of a business should include both the notes that have not yet matured and the dishonored notes.

Accepted Answer

A) True 
 B)False

Question 17

The expense recognition (matching)principle requires use of the allowance method of accounting for bad debts.

Accepted Answer

A) True 
 B)False

Question 18

On July 9, Mifflin Company receives a $8,500, 90-day, 8% note from customer Payton Summers as payment on account. Compute the maturity date for the note.

Accepted Answer

A)  October 8
B)  November 6
C)  October 7
D)  November 7
E)  November 8F) C) and D)
G) C) and E)

Question 19

Craigmont uses the allowance method to account for uncollectible accounts. Its year-end unadjusted trial balance shows Accounts Receivable of $104,500, allowance for doubtful accounts of $665 (credit) and sales of $925,000. If uncollectible accounts are estimated to be 4% of accounts receivable, what is the amount of the bad debts expense adjusting entry?

Accepted Answer

A)  $4,845
B)  $3,700
C)  $3,515
D)  $4,180
E)  $3,850F) A) and C)
G) A) and B)

Question 20

Giorgio Italian Market bought $4,000 worth of merchandise from Food Suppliers and signed a 90-day, 6% promissory note for the $4,000. Food Supplier's journal entry to record the sales transaction is:

Accepted Answer

A)  Debit Notes Receivable $4,000; debit Interest Receivable $60; credit Sales $4,060
B)  Debit Notes Receivable $4,060; credit Sales $4,060
C)  Debit Accounts Receivable $4,060; credit Sales $4,060
D)  Debit Notes Receivable $4,000; credit Sales $4,000
E)  Debit Accounts Receivable $4,000; credit Sales $4,000F) B) and E)
G) B) and C)

Exam 9: Accounting for Receivables

A credit sale of $5,275 to a customer would result in which of the following?

Correct Answer
verified

The notes receivable account of a business should include both the notes that have not yet matured and the dishonored notes.

Correct Answer
verified

On July 9, Mifflin Company receives a $8,500, 90-day, 8% note from customer Payton Summers as payment on account. Compute the maturity date for the note.

Correct Answer
verified

What are some of the considerations management should make when assessing the accounts receivable turnover ratio?

Correct Answer
verified
Since the accounts receivable turnover r...
View Answer

A note that the maker is unable or refuses to pay at maturity is called a dishonored note.

Correct Answer
verified

A company has net sales of $1,200,000 and average accounts receivable of $400,000. What is its accounts receivable turnover for the period?

Correct Answer
verified

MacKenzie Company sold $300 of merchandise to a customer who used a Regional Bank credit card. Regional Bank deducts a 1.5% service charge for sales on its credit cards and credits MacKenzie's account immediately when sales are made. The journal entry to record this sale transaction would be:

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

When using the allowance method of accounting for uncollectible accounts, the entry to write off Jeannie's uncollectible account is a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable-Jeannie.

Correct Answer
verified

A Company had net sales of $23,000, and its average account receivables were $5,700. Its accounts receivable turnover is 0.24.

Correct Answer
verified

Correct Answer
verified

A maker who dishonors a note is one who does not pay it at maturity.

Correct Answer
verified

Giorgio Italian Market bought $4,000 worth of merchandise from Food Suppliers and signed a 90-day, 6% promissory note for the $4,000. Food Supplier's journal entry to record the sales transaction is:

Correct Answer
verified

The accounts receivable turnover is calculated by:

Correct Answer
verified

Correct Answer
verified

Jax Recording Studio purchased $7,800 in electronic components from Music World. Jax signed a 60-day, 8% promissory note for $7,800. Music World's journal entry to record the sales transaction is:

Correct Answer
verified

The materiality constraint, as applied to bad debts:

Correct Answer
verified

The expense recognition (matching)principle requires use of the allowance method of accounting for bad debts.

Correct Answer
verified

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

Correct Answer
verified

Exam 9: Accounting for Receivables

A credit sale of $5,275 to a customer would result in which of the following?

Correct AnswerverifiedShow Answer

The notes receivable account of a business should include both the notes that have not yet matured and the dishonored notes.

Correct AnswerverifiedShow Answer

On July 9, Mifflin Company receives a $8,500, 90-day, 8% note from customer Payton Summers as payment on account. Compute the maturity date for the note.

Correct AnswerverifiedShow Answer

What are some of the considerations management should make when assessing the accounts receivable turnover ratio?

Correct AnswerverifiedSince the accounts receivable turnover r...View AnswerShow Answer

A note that the maker is unable or refuses to pay at maturity is called a dishonored note.

Correct AnswerverifiedShow Answer

A company has net sales of $1,200,000 and average accounts receivable of $400,000. What is its accounts receivable turnover for the period?

Correct AnswerverifiedShow Answer

MacKenzie Company sold $300 of merchandise to a customer who used a Regional Bank credit card. Regional Bank deducts a 1.5% service charge for sales on its credit cards and credits MacKenzie's account immediately when sales are made. The journal entry to record this sale transaction would be:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When using the allowance method of accounting for uncollectible accounts, the entry to write off Jeannie's uncollectible account is a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable-Jeannie.

Correct AnswerverifiedShow Answer

A Company had net sales of $23,000, and its average account receivables were $5,700. Its accounts receivable turnover is 0.24.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A maker who dishonors a note is one who does not pay it at maturity.

Correct AnswerverifiedShow Answer

Giorgio Italian Market bought $4,000 worth of merchandise from Food Suppliers and signed a 90-day, 6% promissory note for the $4,000. Food Supplier's journal entry to record the sales transaction is:

Correct AnswerverifiedShow Answer

The accounts receivable turnover is calculated by:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Jax Recording Studio purchased $7,800 in electronic components from Music World. Jax signed a 60-day, 8% promissory note for $7,800. Music World's journal entry to record the sales transaction is:

Correct AnswerverifiedShow Answer

The materiality constraint, as applied to bad debts:

Correct AnswerverifiedShow Answer

The expense recognition (matching)principle requires use of the allowance method of accounting for bad debts.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified

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verified
Since the accounts receivable turnover r...
View Answer

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