Question 1

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 2

Which of the following is not true regarding promissory notes?

Accepted Answer

A)  Promissory notes are not shown at net realizable value on the statement of financial position.
B)  Promissory notes are usually interest-bearing.
C)  Promissory notes give a stronger legal claim to the holder than accounts receivable.
D)  Promissory notes are frequently accepted from customers who need to extend the payment of an outstanding account receivable.E) None of the above
F) B) and C)

Question 3

A debit balance in the Allowance for Doubtful Accounts

Accepted Answer

A)  is the normal balance for that account.
B)  indicates that actual bad debt write-offs are higher than previous provisions for bad debts.
C)  indicates that actual bad debt write-offs have been less than what was estimated.
D)  cannot occur if the percentage of receivables method of estimating bad debts is used.E) B) and D)
F) A) and D)

Question 4

Allowance for Doubtful Accounts is credited when an account is determined to be uncollectible.

Accepted Answer

A) True 
 B)False

Question 5

The receivables turnover ratio is used to analyze

Accepted Answer

A)  profitability.
B)  liquidity.
C)  risk.
D)  solvency.E) A) and B)
F) All of the above

Question 6

Under the allowance method of accounting for uncollectible accounts, Bad Debts Expense is debited

Accepted Answer

A)  when a credit sale is past due.
B)  at the end of each accounting period.
C)  whenever a pre-determined amount of credit sales have been made.
D)  when an account is determined to be uncollectible.E) B) and C)
F) None of the above

Question 7

The two accounting problems with accounts receivable are: (1) recognizing and (2) disposing.

Accepted Answer

A) True 
 B)False

Question 8

Under the allowance method for uncollectible accounts, the net realizable value of receivables is the same both before and after an account has been written off.

Accepted Answer

A) True 
 B)False  True

Question 9

Receivables might be sold to

Accepted Answer

A)  lengthen the cash-to-cash operating cycle.
B)  take advantage of deep discounts on the net realizable value of receivables.
C)  generate cash quickly.
D)  finance companies at an amount greater than net realizable value.E) C) and D)
F) B) and D)

Question 10

The maker of a promissory note is the party to whom the payment is to be made.

Accepted Answer

A) True 
 B)False

Question 11

Use the following information for questions 
Under the aging of a company's accounts receivable, the uncollectible accounts are estimated to be $24,000. The unadjusted balance for the Allowance for Doubtful Accounts is $8,000 credit.
-What is the balance in the Allowance for Doubtful Accounts account after adjustment?

Accepted Answer

A)  $32,000
B)  $24,000
C)  $16,000
D)  $ 8,000E) C) and D)
F) A) and B)

Question 12

Bad Debts Expense is reported on the income statement as

Accepted Answer

A)  part of cost of goods sold.
B)  an expense subtracted from gross sales to determine net sales.
C)  an operating expense.
D)  a non-operating expense.E) A) and B)
F) A) and C)

Question 13

When a subsidiary ledger and a control account are used, each journal entry that affects accounts receivable must be posted twice.

Accepted Answer

A) True 
 B)False

Question 14

The net amount expected to be received in cash from receivables is termed the

Accepted Answer

A)  net realizable value.
B)  fair value.
C)  gross cash value.
D)  cash-equivalent value.E) A) and B)
F) All of the above

Question 15

Under the allowance method for uncollectible accounts, bad debts expense is not recorded until a customer defaults.

Accepted Answer

A) True 
 B)False

Question 16

The journal entry to record a credit card sale using a nonbank credit card (e.g., Canadian Tire or Sears)  includes a debit to the

Accepted Answer

A)  Cash account.
B)  Accounts Receivable account.
C)  Debit Card Expense account.
D)  Sales account.E) B) and C)
F) B) and D)

Question 17

The collection of an account that had been previously written off under the allowance method for uncollectible accounts

Accepted Answer

A)  will increase profit in the period it is collected.
B)  will decrease profit in the period it is collected.
C)  requires a correcting entry for the period in which the account was written off.
D)  does not affect profit in the period it is collected.E) A) and C)
F) B) and C) D

Question 18

A note receivable is a written promise by the maker to the payee to pay a specified amount of money at a definite time.

Accepted Answer

A) True 
 B)False

Question 19

When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when

Accepted Answer

A)  a sale is made.
B)  an account becomes uncollectible and is written off.
C)  management estimates the amount of uncollectible accounts.
D)  a customer's account becomes past due.E) A) and D)
F) A) and C) C

Question 20

Day Corp receives a $9,000, 8-month, 6% note from Night Corp in settlement of a past due account receivable. What entry will Day Corp make upon receiving the note?

Accepted Answer

The answer of Day Corp receives a $9,000, 8-month, 6%...

Exam 8: Reporting and Analyzing Receivables

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

Correct Answer
verified

Which of the following is not true regarding promissory notes?

Correct Answer
verified

A debit balance in the Allowance for Doubtful Accounts

Correct Answer
verified

Allowance for Doubtful Accounts is credited when an account is determined to be uncollectible.

Correct Answer
verified

The receivables turnover ratio is used to analyze

Correct Answer
verified

Under the allowance method of accounting for uncollectible accounts, Bad Debts Expense is debited

Correct Answer
verified

The two accounting problems with accounts receivable are: (1) recognizing and (2) disposing.

Correct Answer
verified

Under the allowance method for uncollectible accounts, the net realizable value of receivables is the same both before and after an account has been written off.

Correct Answer
verified
True

Receivables might be sold to

Correct Answer
verified

The maker of a promissory note is the party to whom the payment is to be made.

Correct Answer
verified

Correct Answer
verified

Bad Debts Expense is reported on the income statement as

Correct Answer
verified

When a subsidiary ledger and a control account are used, each journal entry that affects accounts receivable must be posted twice.

Correct Answer
verified

The net amount expected to be received in cash from receivables is termed the

Correct Answer
verified

Under the allowance method for uncollectible accounts, bad debts expense is not recorded until a customer defaults.

Correct Answer
verified

The journal entry to record a credit card sale using a nonbank credit card (e.g., Canadian Tire or Sears) includes a debit to the

Correct Answer
verified

The collection of an account that had been previously written off under the allowance method for uncollectible accounts

Correct Answer
verified
D

A note receivable is a written promise by the maker to the payee to pay a specified amount of money at a definite time.

Correct Answer
verified

When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when

Correct Answer
verified
C

Day Corp receives a $9,000, 8-month, 6% note from Night Corp in settlement of a past due account receivable. What entry will Day Corp make upon receiving the note?

Correct Answer
verified

Exam 8: Reporting and Analyzing Receivables

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

Correct AnswerverifiedShow Answer

Which of the following is not true regarding promissory notes?

Correct AnswerverifiedShow Answer

A debit balance in the Allowance for Doubtful Accounts

Correct AnswerverifiedShow Answer

Allowance for Doubtful Accounts is credited when an account is determined to be uncollectible.

Correct AnswerverifiedShow Answer

The receivables turnover ratio is used to analyze

Correct AnswerverifiedShow Answer

Under the allowance method of accounting for uncollectible accounts, Bad Debts Expense is debited

Correct AnswerverifiedShow Answer

The two accounting problems with accounts receivable are: (1) recognizing and (2) disposing.

Correct AnswerverifiedShow Answer

Under the allowance method for uncollectible accounts, the net realizable value of receivables is the same both before and after an account has been written off.

Correct AnswerverifiedTrue

Receivables might be sold to

Correct AnswerverifiedShow Answer

The maker of a promissory note is the party to whom the payment is to be made.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Bad Debts Expense is reported on the income statement as

Correct AnswerverifiedShow Answer

When a subsidiary ledger and a control account are used, each journal entry that affects accounts receivable must be posted twice.

Correct AnswerverifiedShow Answer

The net amount expected to be received in cash from receivables is termed the

Correct AnswerverifiedShow Answer

Under the allowance method for uncollectible accounts, bad debts expense is not recorded until a customer defaults.

Correct AnswerverifiedShow Answer

The journal entry to record a credit card sale using a nonbank credit card (e.g., Canadian Tire or Sears) includes a debit to the

Correct AnswerverifiedShow Answer

The collection of an account that had been previously written off under the allowance method for uncollectible accounts

Correct AnswerverifiedD

A note receivable is a written promise by the maker to the payee to pay a specified amount of money at a definite time.

Correct AnswerverifiedShow Answer

When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when

Correct AnswerverifiedC

Day Corp receives a $9,000, 8-month, 6% note from Night Corp in settlement of a past due account receivable. What entry will Day Corp make upon receiving the note?

Correct AnswerverifiedShow Answer

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True

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D

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C

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