Question 1

The accounts receivable turnover ratio is computed by dividing total sales by the average net receivables during the year.

Accepted Answer

A) True 
 B)False

Question 2

On March 9, Fillmore gave Camp Company a 60-day, 9% promissory note for €6,000. Fillmore honors the note on May 9. Record the collection of the note and interest by Camp assuming that no interest has been accrued.

Accepted Answer

The answer of On March 9, Fillmore gave Camp Company...

Question 3

A 60-day note receivable dated May 13 has a maturity date of

Accepted Answer

A)   July 13.
B)   July 12.
C)   July 11.
D)   July 10.E) A) and D)
F) A) and C)

Question 4

A factor purchases receivables from businesses for a fee and collects the remittances directly from customers.

Accepted Answer

A) True 
 B)False

Question 5

The method of accounting for uncollectible accounts that results in a better matching of expenses with revenues is the

Accepted Answer

A)   aging accounts receivable method.
B)   direct write-off method.
C)   percentage of receivables method.
D)   percentage of sales method.E) A) and B)
F) B) and C)

Question 6

Using the allowance method, the uncollectible accounts for the year is estimated to be $56,000. If the balance for the Allowance for Doubtful Accounts is a $14,000 debit before adjustment, what is the amount of bad debts expense for the period?

Accepted Answer

A)   $14,000
B)   $42,000
C)   $56,000
D)   $70,000E) A) and C)
F) All of the above

Question 7

The two methods of accounting for uncollectible accounts are the ____________ method and the ______________ method.

Accepted Answer

The answer of The two methods of accounting for uncollectible...

Question 8

Miles to Go is a travel agency specializing in tours to Africa and Australia. Miles to Go has $1,500,000 in accounts receivable and factors these receivables with Fox Factors. The agreement with Fox calls for a service charge of 2% of the amount of receivables sold. The net effects on the statement of financial position for Miles to Go of factoring its receivables is a(n)

Accepted Answer

A)   Increase in assets of $30,000.
B)   Increase in assets of $1,470,000.
C)   Increase in equity of $1,470,000.
D)   Decrease in equity of $30,000.E) None of the above
F) B) and D)

Question 9

A major advantage of national credit cards to retailers is that there is no charge to the retailer by the credit card companies for their services.

Accepted Answer

A) True 
 B)False

Question 10

The allowance for doubtful accounts is closed at the end of the fiscal year and is accomplished by debiting bad debt expense and crediting allowance for doubtful accounts.

Accepted Answer

A) True 
 B)False

Question 11

Under the direct write-off method of accounting for uncollectible accounts

Accepted Answer

A)   the allowance account is increased for the actual amount of bad debt at the time of write-off.
B)   a specific account receivable is decreased for the actual amount of bad debt at the time of write-off.
C)   balance sheet relationships are emphasized.
D)   bad debts expense is always recorded in the period in which the revenue was recorded.E) B) and C)
F) B) and D)

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Accounts receivable, which are also referred to as ______________ receivables, are amounts owed by customers on account.

Accepted Answer

The answer of Accounts receivable, which are also referred to...

Question 14

When credit sales are made, _________________ Expense is considered a normal and necessary risk of doing business on a credit basis.

Accepted Answer

The answer of When credit sales are made, _________________ Expense...

Question 15

When the allowance method of accounting for uncollectible accounts is used, Bad Debts Expense is recorded

Accepted Answer

A)   in the year after the credit sale is made.
B)   in the same year as the credit sale.
C)   as each credit sale is made.
D)   when an account is written off as uncollectible.E) B) and C)
F) B) and D)

Question 16

If a retailer regularly sells its receivables to a factor, the service charge of the factor should be classified as a(n)

Accepted Answer

A)   selling expense.
B)   interest expense.
C)   other expense.
D)   contra asset.E) A) and B)
F) A) and C)

Question 17

A customer charges a treadmill at Mike's Sport Shop. The price is €2,000 and the financing charge is 9% per annum if the bill is not paid in 30 days. The customer fails to pay the bill within 30 days and a finance charge is added to the customer's account. The accounts affected by the journal entry made by Mike's Sport Shop to record the finance charge are

Accepted Answer

A)   Accounts Receivable Cash
B)   Cash Finance Receivable
C)   Accounts Receivable Interest Payable
D)   Accounts Receivable Interest RevenueE) None of the above
F) B) and D)

Question 18

A 30-day note dated June 14 has a maturity date of

Accepted Answer

A)   July 13.
B)   July 14.
C)   July 15.
D)   July 12.E) A) and B)
F) C) and D)

Question 19

Which of the following statements concerning receivables is incorrect?

Accepted Answer

A)   Receivables are often listed after short-term investments.
B)   Companies report bad debt expense as a selling expense.
C)   Both the gross amount of receivables and the allowance for doubtful accounts should be reported.
D)   Interest revenue is shown under other income and expense.E) None of the above
F) C) and D)

Question 20

The percentage of sales basis of estimating expected uncollectibles

Accepted Answer

A)   emphasizes the matching of expenses with revenues.
B)   emphasizes statement of financial position relationships.
C)   emphasizes cash realizable value.
D)   is not generally accepted as a basis for estimating bad debts.E) B) and D)
F) A) and C)

Exam 8: Accounting for Receivables

If a retailer regularly sells its receivables to a factor, the service charge of the factor should be classified as a(n)

Correct Answer
verified

The accounts receivable turnover ratio is computed by dividing total sales by the average net receivables during the year.

Correct Answer
verified

On March 9, Fillmore gave Camp Company a 60-day, 9% promissory note for €6,000. Fillmore honors the note on May 9. Record the collection of the note and interest by Camp assuming that no interest has been accrued.

Correct Answer
verified

The percentage of sales basis of estimating expected uncollectibles

Correct Answer
verified

Accounts receivable, which are also referred to as ______________ receivables, are amounts owed by customers on account.

Correct Answer
verified

Which of the following statements concerning receivables is incorrect?

Correct Answer
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The method of accounting for uncollectible accounts that results in a better matching of expenses with revenues is the

Correct Answer
verified

Using the allowance method, the uncollectible accounts for the year is estimated to be $56,000. If the balance for the Allowance for Doubtful Accounts is a $14,000 debit before adjustment, what is the amount of bad debts expense for the period?

Correct Answer
verified

Correct Answer
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A major advantage of national credit cards to retailers is that there is no charge to the retailer by the credit card companies for their services.

Correct Answer
verified

When the allowance method of accounting for uncollectible accounts is used, Bad Debts Expense is recorded

Correct Answer
verified

Under the direct write-off method of accounting for uncollectible accounts

Correct Answer
verified

A 60-day note receivable dated May 13 has a maturity date of

Correct Answer
verified

A factor purchases receivables from businesses for a fee and collects the remittances directly from customers.

Correct Answer
verified

Correct Answer
verified

The two methods of accounting for uncollectible accounts are the method and the __ method.

Correct Answer
verified

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

Correct Answer
verified

When credit sales are made, _________________ Expense is considered a normal and necessary risk of doing business on a credit basis.

Correct Answer
verified

A 30-day note dated June 14 has a maturity date of

Correct Answer
verified

The allowance for doubtful accounts is closed at the end of the fiscal year and is accomplished by debiting bad debt expense and crediting allowance for doubtful accounts.

Correct Answer
verified

Exam 8: Accounting for Receivables

If a retailer regularly sells its receivables to a factor, the service charge of the factor should be classified as a(n)

Correct AnswerverifiedShow Answer

The accounts receivable turnover ratio is computed by dividing total sales by the average net receivables during the year.

Correct AnswerverifiedShow Answer

On March 9, Fillmore gave Camp Company a 60-day, 9% promissory note for €6,000. Fillmore honors the note on May 9. Record the collection of the note and interest by Camp assuming that no interest has been accrued.

Correct AnswerverifiedShow Answer

The percentage of sales basis of estimating expected uncollectibles

Correct AnswerverifiedShow Answer

Accounts receivable, which are also referred to as ______________ receivables, are amounts owed by customers on account.

Correct AnswerverifiedShow Answer

Which of the following statements concerning receivables is incorrect?

Correct AnswerverifiedShow Answer

The method of accounting for uncollectible accounts that results in a better matching of expenses with revenues is the

Correct AnswerverifiedShow Answer

Using the allowance method, the uncollectible accounts for the year is estimated to be $56,000. If the balance for the Allowance for Doubtful Accounts is a $14,000 debit before adjustment, what is the amount of bad debts expense for the period?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A major advantage of national credit cards to retailers is that there is no charge to the retailer by the credit card companies for their services.

Correct AnswerverifiedShow Answer

When the allowance method of accounting for uncollectible accounts is used, Bad Debts Expense is recorded

Correct AnswerverifiedShow Answer

Under the direct write-off method of accounting for uncollectible accounts

Correct AnswerverifiedShow Answer

A 60-day note receivable dated May 13 has a maturity date of

Correct AnswerverifiedShow Answer

A factor purchases receivables from businesses for a fee and collects the remittances directly from customers.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The two methods of accounting for uncollectible accounts are the ____________ method and the ______________ method.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When credit sales are made, _________________ Expense is considered a normal and necessary risk of doing business on a credit basis.

Correct AnswerverifiedShow Answer

A 30-day note dated June 14 has a maturity date of

Correct AnswerverifiedShow Answer

The allowance for doubtful accounts is closed at the end of the fiscal year and is accomplished by debiting bad debt expense and crediting allowance for doubtful accounts.

Correct AnswerverifiedShow Answer

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The two methods of accounting for uncollectible accounts are the method and the __ method.

Correct Answer
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