Question 1

Which board(s)  has(have)  worked 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.E) None of the above
F) A) and D)

Question 2

Short-term receivables are reported in the current assets section before temporary investments.

Accepted Answer

A) True 
 B)False

Question 3

When a note is accepted to settle an open account, Notes Receivable is debited for the note's

Accepted Answer

A)  net realizable value.
B)  maturity value.
C)  face value.
D)  face value plus interest.E) B) and C)
F) A) and B)

Question 4

Using the percentage-of-receivables basis, the uncollectible accounts for the year is estimated to be $38,000. If the balance for the Allowance for Doubtful Accounts is a $7,000 debit before adjustment, what is the amount of bad debt expense for the period?

Accepted Answer

A)  $7,000
B)  $31,000
C)  $38,000
D)  $45,000E) A) and D)
F) B) and D)

Question 5

IFRS sometimes refers to allowances as

Accepted Answer

A)  revenues.
B)  discounts.
C)  provisions.
D)  reserves.E) A) and B)
F) None of the above

Question 6

In recording the sale of accounts receivable, the commission charged by a factor is recorded as

Accepted Answer

A)  Bad Debt Expense.
B)  Commission Expense.
C)  Loss on Sale of Receivables.
D)  Service Charge Expense.E) A) and B)
F) B) and D)

Question 7

Under the direct write-off method of accounting for uncollectible accounts, Bad Debt 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) A) and D)
F) None of the above

Question 8

The maturity value of a $50,000, 9%, 60-day note receivable dated July 3 is

Accepted Answer

A)  $50,000.
B)  $50,750.
C)  $54,500.
D)  $59,000.E) A) and C)
F) B) and D)

Question 9

If a retailer accepts a national credit card such as Visa, the retailer must maintain detailed records of customer accounts.

Accepted Answer

A) True 
 B)False

Question 10

A 90-day note dated May 14 has a maturity date of

Accepted Answer

A)  August 14.
B)  August 12.
C)  August 13.
D)  August 15.E) B) and C)
F) None of the above

Question 11

Both accounts receivable and notes receivable represent claims that are expected to be collected in cash.

Accepted Answer

A) True 
 B)False  True

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Two methods of accounting for uncollectible accounts are the

Accepted Answer

A)  allowance method and the accrual method.
B)  allowance method and the net realizable method.
C)  direct write-off method and the accrual method.
D)  direct write-off method and the allowance method.E) A) and B)
F) A) and C)

Question 14

If a company uses the allowance method to account for uncollectible accounts, the entry to write off an uncollectible account only involves balance sheet accounts.

Accepted Answer

A) True 
 B)False

Question 15

The financial statements of Danielle Manufacturing Company report net sales of $750,000 and accounts receivable of $60,000 and $90,000 at the beginning and end of the year, respectively. What is the average collection period for accounts receivable in days?

Accepted Answer

A)  29.2
B)  36.5
C)  43.8
D)  73E) A) and C)
F) C) and D)

Question 16

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 Debt Expense should be credited.
D)  Sales Revenue should be debited.E) B) and C)
F) C) and D) B

Question 17

YZ Company accepted a national credit card for a $4,000 purchase. The cost of the goods sold is $2,400. The credit card company charges a 3% fee. What is the impact of this transaction on net operating income?

Accepted Answer

A)  Increase by $1,480
B)  Increase by $1,552
C)  Increase by $1,600
D)  Increase by $3,880E) A) and B)
F) A) and C)

Question 18

An aging of accounts receivable schedule is based on the premise that the longer the period an account remains unpaid, the greater the probability that it will eventually be collected.

Accepted Answer

A) True 
 B)False

Question 19

The financial statements of Gervais Manufacturing Company report net sales of $500,000 and accounts receivable of $80,000 and $40,000 at the beginning and end of the year, respectively. What is the accounts receivable turnover for Gervais?

Accepted Answer

A)  6.3 times
B)  8.3 times
C)  10 times
D)  12.5 timesE) A) and C)
F) A) and D)

Question 20

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 Debt 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 Revenue and a credit to Accounts Receivable.E) None of the above
F) All of the above B

Exam 8: Accounting for Receivables

Which board(s) has(have) worked to implement fair value measurement for financial instruments?

Correct AnswerverifiedShow Answer

Short-term receivables are reported in the current assets section before temporary investments.

Correct AnswerverifiedShow Answer

When a note is accepted to settle an open account, Notes Receivable is debited for the note's

Correct AnswerverifiedShow Answer

Using the percentage-of-receivables basis, the uncollectible accounts for the year is estimated to be $38,000. If the balance for the Allowance for Doubtful Accounts is a $7,000 debit before adjustment, what is the amount of bad debt expense for the period?

Correct AnswerverifiedShow Answer

IFRS sometimes refers to allowances as

Correct AnswerverifiedShow Answer

In recording the sale of accounts receivable, the commission charged by a factor is recorded as

Correct AnswerverifiedShow Answer

Under the direct write-off method of accounting for uncollectible accounts, Bad Debt Expense is debited

Correct AnswerverifiedShow Answer

The maturity value of a $50,000, 9%, 60-day note receivable dated July 3 is

Correct AnswerverifiedShow Answer

If a retailer accepts a national credit card such as Visa, the retailer must maintain detailed records of customer accounts.

Correct AnswerverifiedShow Answer

A 90-day note dated May 14 has a maturity date of

Correct AnswerverifiedShow Answer

Both accounts receivable and notes receivable represent claims that are expected to be collected in cash.

Correct AnswerverifiedTrue

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

Correct AnswerverifiedShow Answer

Two methods of accounting for uncollectible accounts are the

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 balance sheet accounts.

Correct AnswerverifiedShow Answer

The financial statements of Danielle Manufacturing Company report net sales of $750,000 and accounts receivable of $60,000 and $90,000 at the beginning and end of the year, respectively. What is the average collection period for accounts receivable in days?

Correct AnswerverifiedShow Answer

When an account becomes uncollectible and must be written off,

Correct AnswerverifiedB

YZ Company accepted a national credit card for a $4,000 purchase. The cost of the goods sold is $2,400. The credit card company charges a 3% fee. What is the impact of this transaction on net operating income?

Correct AnswerverifiedShow Answer

An aging of accounts receivable schedule is based on the premise that the longer the period an account remains unpaid, the greater the probability that it will eventually be collected.

Correct AnswerverifiedShow Answer

The financial statements of Gervais Manufacturing Company report net sales of $500,000 and accounts receivable of $80,000 and $40,000 at the beginning and end of the year, respectively. What is the accounts receivable turnover for Gervais?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedB

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True

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B

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B