Question 1

Which of the following practices by a credit card company results in lower interest charges to the cardholder?

Accepted Answer

A)   The card company states interest as a monthly percentage rather than an annual percentage.
B)   The card company allows a grace period before interest is accrued.
C)   The card company allows cardholders to skip payments on their cards.
D)   The card company calculates finance charges from the date of purchase to the date the amount is paid.

Question 2

Under the allowance method of accounting for uncollectible accounts,

Accepted Answer

A)   the cash realizable value of accounts receivable is greater before an account is written off than after it is written off.
B)   Bad Debt Expense is debited when a specific account is written off as uncollectible.
C)   the cash realizable value of accounts receivable in the balance sheet is the same before and after an account is written off.
D)   Allowance for Doubtful Accounts is closed each year to Income Summary.

Question 3

Joe's Supply Co. has the following transactions related to notes receivable during the last 2 months of 2018.
Nov. 1 Loaned $20,000 cash to Sara Rondelli on a 1-year, 12% note.
Dec. 11 Sold goods to Phair, Inc., receiving a $11,700, 90-day, 8% note.
16 Received an $12,000, 6-month, 9% note in exchange for Grace Tanner's outstanding accounts receivable.
31 Accrued interest revenue on all notes receivable.
Instructions
(a) Journalize the transactions for Joe's Supply Co.
(b) Record the collection of the Rondelli note at its maturity in 2019.

Accepted Answer

*($20000...

Question 4

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 have exceeded 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 sales method of estimating bad debts is used.

Question 5

Which one of the following is not a primary problem associated with accounts receivable?

Accepted Answer

A)   Depreciating accounts receivable
B)   Recognizing accounts receivable
C)   Valuing accounts receivable
D)   Disposing of accounts receivable

Question 6

Trade receivables occur when two companies trade or exchange notes receivables.

Accepted Answer

A) True 
 B)False

Question 7

Short-term notes receivable are reported at

Accepted Answer

A)   cash (net)  realizable value.
B)   face value.
C)   gross realizable value.
D)   maturity value.

Question 8

The basic issues in accounting for notes receivable include each of the following except

Accepted Answer

A)   analyzing notes receivable.
B)   disposing of notes receivable.
C)   recognizing notes receivable.
D)   valuing notes receivable.

Question 9

Both the gross amount of receivables and the allowance for doubtful accounts should be reported in the financial statements.

Accepted Answer

A) True 
 B)False

Question 10

On February 7, Jackson Company sold goods on account to Phillips Enterprises for $5,200, terms 2/10, n/30. On March 9, Phillips gave Jackson a 60-day, 12% promissory note in settlement of the account. Record the sale and the acceptance of the promissory note on the books of Jackson Company.

Accepted Answer

The answer of On February 7, Jackson Company sold goods...

Question 11

Receivables are valued and reported in the balance sheet at their gross amount less any sales returns and allowances and less any cash discounts.

Accepted Answer

A) True 
 B)False

Question 12

The direct write-off method of accounting for bad debts

Accepted Answer

A)   uses an allowance account.
B)   uses a contra-asset account.
C)   does not require estimates of bad debt losses.
D)   is the preferred method under generally accepted accounting principles.

Question 13

Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible.

Accepted Answer

A) True 
 B)False

Question 14

Syfy Company on July 15 sells merchandise on account to Eureka Co. for $5,000, terms 2/10, n/30. On July 20 Eureka Co. returns merchandise worth $2,000 to Syfy Company. On July 24 payment is received from Eureka Co. for the balance due. What is the amount of cash received?

Accepted Answer

A)   $2,900
B)   $2,940
C)   $3,000
D)   $5,000

Question 15

Allowance for Doubtful Accounts on the balance sheet

Accepted Answer

A)   is offset against total current assets.
B)   increases the cash realizable value of accounts receivable.
C)   appears under the heading "Other Assets."
D)   is offset against accounts receivable.

Question 16

Newton Company has the following accounts in its general ledger at July 31: Accounts Receivable $40,000 and Allowance for Doubtful Accounts $2,500. During August, the following transactions occurred.
Oct. 15 Sold $15,000 of accounts receivable to Fast Factors, Inc. who assesses a 3% finance charge.
25 Made sales of $800 on VISA credit cards. The credit card service charge is 2%.
Instructions
Journalize the transactions.

Accepted Answer

The answer of Newton Company has the following accounts in...

Question 17

The maturity date of a 1-month note receivable dated June 30 is July 30.

Accepted Answer

A) True 
 B)False

Question 18

In 2018, Warehouse 13 had net credit sales of $750,000. On January 1, 2018, Allowance for Doubtful Accounts had a credit balance of $16,000. During 2018, $29,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage of receivable basis) . If the accounts receivable balance at December 31 was $150,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2018?

Accepted Answer

A)   $150,000
B)   $29,000
C)   $28,000
D)   $31,000

Question 19

Which board(s)  has(have)  faced bitter opposition when working to implement fair value measurement for financial instruments?

Accepted Answer

A)   FASB, but not IASB.
B)   IASB, but not FASB.
C)   both FASB and IASB.
D)   neither FASB nor IASB.IFRS:

Question 20

If a company sells its accounts receivables to a factor,

Accepted Answer

A)   the seller pays a commission to the factor.
B)   the factor pays a commission to the seller.
C)   there is a gain on the sale of the receivables.
D)   the seller defers recognition of sales revenue until the account is collected.

Exam 8: Accounting for Receivables

Trade receivables occur when two companies trade or exchange notes receivables.

Correct Answer
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Correct Answer
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Receivables are valued and reported in the balance sheet at their gross amount less any sales returns and allowances and less any cash discounts.

Correct Answer
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If a company sells its accounts receivables to a factor,

Correct Answer
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On February 7, Jackson Company sold goods on account to Phillips Enterprises for $5,200, terms 2/10, n/30. On March 9, Phillips gave Jackson a 60-day, 12% promissory note in settlement of the account. Record the sale and the acceptance of the promissory note on the books of Jackson Company.

Correct Answer
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A debit balance in the Allowance for Doubtful Accounts

Correct Answer
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Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible.

Correct Answer
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The maturity date of a 1-month note receivable dated June 30 is July 30.

Correct Answer
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Both the gross amount of receivables and the allowance for doubtful accounts should be reported in the financial statements.

Correct Answer
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Which board(s) has(have) faced bitter opposition when working to implement fair value measurement for financial instruments?

Correct Answer
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Syfy Company on July 15 sells merchandise on account to Eureka Co. for $5,000, terms 2/10, n/30. On July 20 Eureka Co. returns merchandise worth $2,000 to Syfy Company. On July 24 payment is received from Eureka Co. for the balance due. What is the amount of cash received?

Correct Answer
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The direct write-off method of accounting for bad debts

Correct Answer
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Correct Answer
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Under the allowance method of accounting for uncollectible accounts,

Correct Answer
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Which of the following practices by a credit card company results in lower interest charges to the cardholder?

Correct Answer
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Which one of the following is not a primary problem associated with accounts receivable?

Correct Answer
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Correct Answer
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*($20000...
View Answer

Allowance for Doubtful Accounts on the balance sheet

Correct Answer
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The basic issues in accounting for notes receivable include each of the following except

Correct Answer
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Short-term notes receivable are reported at

Correct Answer
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Exam 8: Accounting for Receivables

Trade receivables occur when two companies trade or exchange notes receivables.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Receivables are valued and reported in the balance sheet at their gross amount less any sales returns and allowances and less any cash discounts.

Correct AnswerverifiedShow Answer

If a company sells its accounts receivables to a factor,

Correct AnswerverifiedShow Answer

On February 7, Jackson Company sold goods on account to Phillips Enterprises for $5,200, terms 2/10, n/30. On March 9, Phillips gave Jackson a 60-day, 12% promissory note in settlement of the account. Record the sale and the acceptance of the promissory note on the books of Jackson Company.

Correct AnswerverifiedShow Answer

A debit balance in the Allowance for Doubtful Accounts

Correct AnswerverifiedShow Answer

Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible.

Correct AnswerverifiedShow Answer

The maturity date of a 1-month note receivable dated June 30 is July 30.

Correct AnswerverifiedShow Answer

Both the gross amount of receivables and the allowance for doubtful accounts should be reported in the financial statements.

Correct AnswerverifiedShow Answer

Which board(s) has(have) faced bitter opposition when working to implement fair value measurement for financial instruments?

Correct AnswerverifiedShow Answer

Syfy Company on July 15 sells merchandise on account to Eureka Co. for $5,000, terms 2/10, n/30. On July 20 Eureka Co. returns merchandise worth $2,000 to Syfy Company. On July 24 payment is received from Eureka Co. for the balance due. What is the amount of cash received?

Correct AnswerverifiedShow Answer

The direct write-off method of accounting for bad debts

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Under the allowance method of accounting for uncollectible accounts,

Correct AnswerverifiedShow Answer

Which of the following practices by a credit card company results in lower interest charges to the cardholder?

Correct AnswerverifiedShow Answer

Which one of the following is not a primary problem associated with accounts receivable?

Correct AnswerverifiedShow Answer

Correct Answerverified *($20000...View AnswerShow Answer

Allowance for Doubtful Accounts on the balance sheet

Correct AnswerverifiedShow Answer

The basic issues in accounting for notes receivable include each of the following except

Correct AnswerverifiedShow Answer

Short-term notes receivable are reported at

Correct AnswerverifiedShow Answer

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*($20000...
View Answer

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