Question 1

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) All of the above
F) C) and D)

Question 2

The entry to record the dishonor of a note receivable assuming the payee expects eventual collection includes a debit to

Accepted Answer

A)   Notes Receivable.
B)   Cash.
C)   Allowance for Doubtful Accounts.
D)   Accounts Receivable.E) A) and B)
F) B) and C)

Question 3

An aging of a company's accounts receivable indicates that $7,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $2,000 debit balance, the adjustment to record bad debts for the period will require a

Accepted Answer

A)   debit to Bad Debt Expense for $7,000.
B)   debit to Bad Debt Expense for $9,000.
C)   debit to Bad Debt Expense for $5,000.
D)   credit to Allowance for Doubtful Accounts for $2,000.E) A) and C)
F) None of the above

Question 4

Sales resulting from the use of Visa and MasterCard are considered ______________ by the retailer.

Accepted Answer

The answer of Sales resulting from the use of Visa...

Question 5

The retailer considers Visa and MasterCard sales as

Accepted Answer

A)   cash sales.
B)   promissory sales.
C)   credit sales.
D)   contingent sales.E) A) and B)
F) A) and C)

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.E) A) and B)
F) A) and C)

Question 7

Among the types of receivables reported on the statement of financial position, which of the following is considered the most significant claim held by a company?

Accepted Answer

A)   Others receivables (including loans to officers) .
B)   Notes receivable.
C)   Accounts receivable.
D)   Advances to employees.E) A) and B)
F) A) and C)

Question 8

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 9

Scully Company had accounts receivable of €115,000 on January 1, 2014. The only transactions that affected accounts receivable during 2014 were net credit sales of €1,200,000, cash collections of €1,000,000, and accounts written off of €30,000.
Instructions
(a) Compute the ending balance of accounts receivable.
(b) Compute the accounts receivable turnover ratio for 2014.
(c) Compute the average collection period in days.

Accepted Answer

The answer of Scully Company had accounts receivable of €115,000...

Question 10

Which of the following transactions affects only statement of financial position accounts?

Accepted Answer

A)   Recovery of a bad debt using the allowance method.
B)   Recording bad debt expense using the allowance method.
C)   Writing off a bad debt using the direct write-off method.
D)   Recording bad debt expense using the percentage of sales basis.E) B) and D)
F) A) and D)

Question 11

When customers make purchases with a national credit card, the retailer

Accepted Answer

A)   is responsible for maintaining customer accounts.
B)   is not involved in the collection process.
C)   absorbs any losses from uncollectible accounts.
D)   receives cash equal to the full price of the merchandise sold from the credit card company.E) A) and D)
F) None of the above

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

The interest rate specified on any note is for a

Accepted Answer

A)   day.
B)   month.
C)   week.
D)   year.E) A) and C)
F) A) and D)

Question 14

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.E) None of the above
F) A) and B)

Question 15

Which of the following is false regarding the Allowance for Doubtful Accounts?

Accepted Answer

A)   The Allowances for Doubtful Accounts is closed at the end of the fiscal year.
B)   Cash realizable value reduces receivables in the statement of financial position by the amount of estimated uncollectible receivables.
C)   Cash realizable value is also referred to as "amortized cost" by the International Accounting Standards Board.
D)   Cash realizable value is also referred to as "cash (net)  realizable value."E) A) and D)
F) A) and B)

Question 16

Putnam Company's account balances at December 31 for Accounts Receivable and Allowance for Doubtful Accounts were $1,400,000 and $70,000 (Cr.) , respectively. An aging of accounts receivable indicated that $118,000 are expected to become uncollectible. The amount of the adjusting entry for bad debts at December 31 is

Accepted Answer

A)   $118,000.
B)   $48,000.
C)   $188,000.
D)   $70,000.E) B) and C)
F) None of the above

Question 17

Which of the following statements is true concerning how derecognition of receivables is treated under IFRS and U.S. GAAP?

Accepted Answer

A)   U.S. GAAP permits partial derecognition; IFRS does not.
B)   The criteria used to derecognize a receivable under IFRS uses a combination of an approach focused on risks and rewards and loss of control.
C)   The criteria used to derecognize a receivable under U.S. GAAP uses risks and rewards as the primary criterion.
D)   All of these answer choices are correct.E) A) and D)
F) A) and C)

Question 18

Patel Co. sells Christmas angels. Patel determines that at the end of December, it has the following aging schedule of Accounts Receivable:  Compute the net receivables based on the above information at the end of December. (There was no beginning balance in the Allowance for Doubtful Accounts).

Accepted Answer

The answer of Patel Co. sells Christmas angels. Patel determines...

Question 19

Sales resulting from the use of Visa and MasterCard are considered credit sales by the retailer.

Accepted Answer

A) True 
 B)False

Question 20

On January 15, 2014, Raymond Company received a two-month, 9%, $8,000 note from William Pentel for the settlement of his open account. The entry by Raymond Company on January 15, 2014 would include a:

Accepted Answer

A)   debit of $8,120 to Notes Receivable.
B)   debit of $8,000 to Notes Receivable.
C)   credit of $8,120 to Accounts Receivable.
D)   credit of $8,000 to Notes Receivable.E) A) and D)
F) B) and C)

Exam 8: Accounting for Receivables

Which of the following statements is true concerning how derecognition of receivables is treated under IFRS and U.S. GAAP?

Correct Answer
verified

Correct Answer
verified

When customers make purchases with a national credit card, the retailer

Correct Answer
verified

On January 15, 2014, Raymond Company received a two-month, 9%, $8,000 note from William Pentel for the settlement of his open account. The entry by Raymond Company on January 15, 2014 would include a:

Correct Answer
verified

Which of the following is false regarding the Allowance for Doubtful Accounts?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

The entry to record the dishonor of a note receivable assuming the payee expects eventual collection includes a debit to

Correct Answer
verified

Sales resulting from the use of Visa and MasterCard are considered ______________ by the retailer.

Correct Answer
verified

Sales resulting from the use of Visa and MasterCard are considered credit sales by the retailer.

Correct Answer
verified

Among the types of receivables reported on the statement of financial position, which of the following is considered the most significant claim held by a company?

Correct Answer
verified

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

Correct Answer
verified

Which of the following transactions affects only statement of financial position accounts?

Correct Answer
verified

An aging of a company's accounts receivable indicates that $7,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $2,000 debit balance, the adjustment to record bad debts for the period will require a

Correct Answer
verified

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

Correct Answer
verified

The retailer considers Visa and MasterCard sales as

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Patel Co. sells Christmas angels. Patel determines that at the end of December, it has the following aging schedule of Accounts Receivable: Compute the net receivables based on the above information at the end of December. (There was no beginning balance in the Allowance for Doubtful Accounts).

Correct Answer
verified

The interest rate specified on any note is for a

Correct Answer
verified

Exam 8: Accounting for Receivables

Which of the following statements is true concerning how derecognition of receivables is treated under IFRS and U.S. GAAP?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When customers make purchases with a national credit card, the retailer

Correct AnswerverifiedShow Answer

On January 15, 2014, Raymond Company received a two-month, 9%, $8,000 note from William Pentel for the settlement of his open account. The entry by Raymond Company on January 15, 2014 would include a:

Correct AnswerverifiedShow Answer

Which of the following is false regarding the Allowance for Doubtful Accounts?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The entry to record the dishonor of a note receivable assuming the payee expects eventual collection includes a debit to

Correct AnswerverifiedShow Answer

Sales resulting from the use of Visa and MasterCard are considered ______________ by the retailer.

Correct AnswerverifiedShow Answer

Sales resulting from the use of Visa and MasterCard are considered credit sales by the retailer.

Correct AnswerverifiedShow Answer

Among the types of receivables reported on the statement of financial position, which of the following is considered the most significant claim held by a company?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following transactions affects only statement of financial position accounts?

Correct AnswerverifiedShow Answer

An aging of a company's accounts receivable indicates that $7,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $2,000 debit balance, the adjustment to record bad debts for the period will require a

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The retailer considers Visa and MasterCard sales as

Correct AnswerverifiedShow Answer

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

Patel Co. sells Christmas angels. Patel determines that at the end of December, it has the following aging schedule of Accounts Receivable: Compute the net receivables based on the above information at the end of December. (There was no beginning balance in the Allowance for Doubtful Accounts).

Correct AnswerverifiedShow Answer

The interest rate specified on any note is for a

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified