Question 1

A company has net credit sales of $750,000 for the year and it estimates that uncollectible accounts will be 2% of sales. If Allowance for Doubtful Accounts has a credit balance of $2,000 prior to adjustment, its balance after adjustment will be a credit of

Accepted Answer

A)   $13,000.
B)   $15,000.
C)   $15,040.
D)   $17,000.

Question 2

The percentage of receivables basis for estimating uncollectible accounts emphasizes

Accepted Answer

A)   cash realizable value.
B)   the relationship between accounts receivable and bad debt expense.
C)   income statement relationships.
D)   the relationship between sales and accounts receivable.

Question 3

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.

Question 4

Which use the term impairment to indicate that a receivable may not be collected?

Accepted Answer

A)   Neither IFRS nor GAAP
B)   Both IFRS and GAAP
C)   IFRS, but not GAAP
D)   GAAP, but not IFRS

Question 5

The two key parties to a note are the maker and the payee.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A)   a sale is made.
B)   an account becomes bad and is written off.
C)   management estimates the amount of uncollectibles.
D)   a customer's account becomes past-due.

Question 7

A promissory note

Accepted Answer

A)   is not a formal credit instrument.
B)   may be used to settle an accounts receivable.
C)   has the party to whom the money is due as the maker.
D)   cannot be factored to another party.

Question 8

The term "receivables" refers to

Accepted Answer

A)   amounts due from individuals or companies.
B)   merchandise to be collected from individuals or companies.
C)   cash to be paid to creditors.
D)   cash to be paid to debtors.

Question 9

A 30-day note dated June 18 has a maturity date of

Accepted Answer

A)   July 19.
B)   July 18.
C)   July 17.
D)   July 16.

Question 10

Which of the following would require a compound journal entry?

Accepted Answer

A)   To record merchandise returned that was previously purchased on account.
B)   To record sales on account.
C)   To record purchases of inventory when a discount is offered for prompt payment.
D)   To record collection of accounts receivable when a cash discount is taken.

Question 11

Major advantages of credit cards to the retailer include all of the following except the

Accepted Answer

A)   issuer does the credit investigation of customers.
B)   issuer undertakes the collection process.
C)   retailer receives more cash from the credit card issuer.
D)   All of these answers are correct.

Exam 8: Accounting for Receivables

The percentage of receivables basis for estimating uncollectible accounts emphasizes

Correct Answer
verified

The two key parties to a note are the maker and the payee.

Correct Answer
verified

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

Correct Answer
verified

A company has net credit sales of $750,000 for the year and it estimates that uncollectible accounts will be 2% of sales. If Allowance for Doubtful Accounts has a credit balance of $2,000 prior to adjustment, its balance after adjustment will be a credit of

Correct Answer
verified

Major advantages of credit cards to the retailer include all of the following except the

Correct Answer
verified

The term "receivables" refers to

Correct Answer
verified

Which use the term impairment to indicate that a receivable may not be collected?

Correct Answer
verified

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

Correct Answer
verified

Which of the following would require a compound journal entry?

Correct Answer
verified

A 30-day note dated June 18 has a maturity date of

Correct Answer
verified

A promissory note

Correct Answer
verified

Exam 8: Accounting for Receivables

The percentage of receivables basis for estimating uncollectible accounts emphasizes

Correct AnswerverifiedShow Answer

The two key parties to a note are the maker and the payee.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A company has net credit sales of $750,000 for the year and it estimates that uncollectible accounts will be 2% of sales. If Allowance for Doubtful Accounts has a credit balance of $2,000 prior to adjustment, its balance after adjustment will be a credit of

Correct AnswerverifiedShow Answer

Major advantages of credit cards to the retailer include all of the following except the

Correct AnswerverifiedShow Answer

The term "receivables" refers to

Correct AnswerverifiedShow Answer

Which use the term impairment to indicate that a receivable may not be collected?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following would require a compound journal entry?

Correct AnswerverifiedShow Answer

A 30-day note dated June 18 has a maturity date of

Correct AnswerverifiedShow Answer

A promissory note

Correct AnswerverifiedShow Answer

Correct Answer
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