ACC291_Ch.8

The entry to recognize the bad debt expense ________ when the allowance method is used

decreases current assets

What are the two key parties to a promissory note?

The maker and the payee

Maynard Mills received a 60-day, 5% note for $10,000 on April 5. Which of the following statements is true?

The principal of the note plus interest is due on June 4.

Which of the following statements about a note receivable is true?

A: It can be transferred to another party by endorsement.

B : It takes the place of checks in a business firm.

C : It can only be collected by a bank.

D : It eliminates the need for a bad debts allowance.

It can be transferred to another party by endorsement.

What happens when a note receivable is dishonored?

A: Accounts Receivable is debited if eventual collection is expected

B : bad debts expense is recorded

C : the maturity value of the note is written off

D : interest revenue is never recorded

Accounts Receivable is debited if eventual collection is expected

When a note receivable is honored, Cash is debited for the note's

A : market value

B : face value

C : maturity value

D : fair value

maturity value

A debit to ________ is entered to record the dishonor of a note receivable assuming the payee expects eventual collection.

A : Cash

B : Note Receivable

C : Allowance for Doubtful Accounts

D : Accounts Receivable

Accounts Receivable

Which of the following statements concerning receivables are true? Select all that apply.

A : Notes receivable are often listed last under receivables.

B : Interest revenue and gain on sale of notes receivable are shown under other revenues and gains.

C : The contingent liability from selling notes receivable should be disclosed.

D : Both the gross amount of receivables and the allowance for doubtful accounts should be reported.

B: Interest revenue and gain on sale of notes receivable are shown under other revenues and gains C: The contingent liability from selling notes receivable should be disclosed. D:Both the gross amount of receivables and the allowance for doubtful accounts should be reported

How is the average collection period computed?

by dividing 365 days by the accounts receivable turnover ratio

The use of credit cards offers advantages to the retailer. Which of the following is NOT an advantage of credit cards to the retailer?

A : the issuer undertakes the collection process

B : all of these choices are disadvantages

C : the retailer receives more cash from the credit card issuer

D : the issuer does the credit investigation of customers

C : the retailer receives more cash from the credit card issuer

The retailer ________ when customers use national credit cards to make purchases.

is not involved in the collection process

In addition to gross amount of receivables, which of the following is included in the balance sheet?

allowance for doubtful accounts

________ is a threat of nonpayment from a single large customer that could adversely affect the financial health of a company.

A concentration of credit risk

________ is often the most critical part of managing receivables.

Determining who gets credit and who doesn't

Short-term receivables are reported above the short-term investments in the balance sheet.

False

Which of the following statements regarding reporting receivables on the balance sheet is true?

Allowance for Doubtful Accounts is shown as a deduction from Accounts Receivable on the balance sheet.

Which of the following statements is true?

A : Notes receivable are often listed last under receivables.

B : Interest revenue and gain on sale of notes receivable are shown under accounts receivable.

C :Both the gross amount of receivables and the allowance for doubtful accounts should be reported.

D : The contingent liability from selling notes receivable should never be disclosed.

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

Which of the following would be recorded in an income statement under "other revenues and gains"?

A : notes receivable

B : operating expenses

C : interest revenue

D : bad debt expense

interest revenue

Short-term receivables are reported in the current assets section of the balance sheet,
above/below short-term investments.

below

Which of the following statements regarding the financial statement presentation of receivables is NOT true?

A : The allowance for doubtful receivables is reported under notes in the financial statement.

B : Short-term receivables are reported in the current assets section of the balance sheet.

C : Companies report bad debt expense under "selling expense" in the operating expenses section of the income statement.

D : Short-term investments appear after short-term receivables on the balance sheet because these investments are nearer to cash.

A: The allowance for doubtful receivables is reported under notes in the financial statement. D: Short-term investments appear after short-term receivables on the balance sheet because these investments are nearer to cash.

The financial statements of R & P Imports report net sales of $600,000 and accounts receivable of $60,000 and $100,000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for R & P Imports?

A 12 times

B 10.5 times

C 8.3 times

D 7.5 times

D 7.5 times

The financial statements of the Darlington Company reports net sales of $500,000 and accounts receivable of $40,000 and $20,000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for Darlington?

A : 16.6

B : 23

C : 10

D : 21.1

A 16.6

In order to measure the average amount of time that a receivable is outstanding, a company first needs to measure

the number of times, on average, it collects receivables during the period

The financial statements of the Larson Company report net sales of $1,000,000 and accounts receivable of $80,000 and $60,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days?

25.5

What does a high accounts receivable turnover ratio indicate?

customers are making payments very quickly

How is the accounts receivable turnover computed?

by dividing net credit sales by average receivables

The average collection period for receivables is computed by dividing 365 days by

accounts receivables turnover

ACC291_Ch.8 - Subjecto.com

ACC291_Ch.8

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The entry to recognize the bad debt expense ________ when the allowance method is used

decreases current assets

What are the two key parties to a promissory note?

The maker and the payee

Maynard Mills received a 60-day, 5% note for $10,000 on April 5. Which of the following statements is true?

The principal of the note plus interest is due on June 4.

Which of the following statements about a note receivable is true?

A: It can be transferred to another party by endorsement.

B : It takes the place of checks in a business firm.

C : It can only be collected by a bank.

D : It eliminates the need for a bad debts allowance.

It can be transferred to another party by endorsement.

What happens when a note receivable is dishonored?

A: Accounts Receivable is debited if eventual collection is expected

B : bad debts expense is recorded

C : the maturity value of the note is written off

D : interest revenue is never recorded

Accounts Receivable is debited if eventual collection is expected

When a note receivable is honored, Cash is debited for the note’s

A : market value

B : face value

C : maturity value

D : fair value

maturity value

A debit to ________ is entered to record the dishonor of a note receivable assuming the payee expects eventual collection.

A : Cash

B : Note Receivable

C : Allowance for Doubtful Accounts

D : Accounts Receivable

Accounts Receivable

Which of the following statements concerning receivables are true? Select all that apply.

A : Notes receivable are often listed last under receivables.

B : Interest revenue and gain on sale of notes receivable are shown under other revenues and gains.

C : The contingent liability from selling notes receivable should be disclosed.

D : Both the gross amount of receivables and the allowance for doubtful accounts should be reported.

B: Interest revenue and gain on sale of notes receivable are shown under other revenues and gains C: The contingent liability from selling notes receivable should be disclosed. D:Both the gross amount of receivables and the allowance for doubtful accounts should be reported

How is the average collection period computed?

by dividing 365 days by the accounts receivable turnover ratio

The use of credit cards offers advantages to the retailer. Which of the following is NOT an advantage of credit cards to the retailer?

A : the issuer undertakes the collection process

B : all of these choices are disadvantages

C : the retailer receives more cash from the credit card issuer

D : the issuer does the credit investigation of customers

C : the retailer receives more cash from the credit card issuer

The retailer ________ when customers use national credit cards to make purchases.

is not involved in the collection process

In addition to gross amount of receivables, which of the following is included in the balance sheet?

allowance for doubtful accounts

________ is a threat of nonpayment from a single large customer that could adversely affect the financial health of a company.

A concentration of credit risk

________ is often the most critical part of managing receivables.

Determining who gets credit and who doesn’t

Short-term receivables are reported above the short-term investments in the balance sheet.

False

Which of the following statements regarding reporting receivables on the balance sheet is true?

Allowance for Doubtful Accounts is shown as a deduction from Accounts Receivable on the balance sheet.

Which of the following statements is true?

A : Notes receivable are often listed last under receivables.

B : Interest revenue and gain on sale of notes receivable are shown under accounts receivable.

C :Both the gross amount of receivables and the allowance for doubtful accounts should be reported.

D : The contingent liability from selling notes receivable should never be disclosed.

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

Which of the following would be recorded in an income statement under "other revenues and gains"?

A : notes receivable

B : operating expenses

C : interest revenue

D : bad debt expense

interest revenue

Short-term receivables are reported in the current assets section of the balance sheet,
above/below short-term investments.

below

Which of the following statements regarding the financial statement presentation of receivables is NOT true?

A : The allowance for doubtful receivables is reported under notes in the financial statement.

B : Short-term receivables are reported in the current assets section of the balance sheet.

C : Companies report bad debt expense under "selling expense" in the operating expenses section of the income statement.

D : Short-term investments appear after short-term receivables on the balance sheet because these investments are nearer to cash.

A: The allowance for doubtful receivables is reported under notes in the financial statement. D: Short-term investments appear after short-term receivables on the balance sheet because these investments are nearer to cash.

The financial statements of R & P Imports report net sales of $600,000 and accounts receivable of $60,000 and $100,000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for R & P Imports?

A 12 times

B 10.5 times

C 8.3 times

D 7.5 times

D 7.5 times

The financial statements of the Darlington Company reports net sales of $500,000 and accounts receivable of $40,000 and $20,000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for Darlington?

A : 16.6

B : 23

C : 10

D : 21.1

A 16.6

In order to measure the average amount of time that a receivable is outstanding, a company first needs to measure

the number of times, on average, it collects receivables during the period

The financial statements of the Larson Company report net sales of $1,000,000 and accounts receivable of $80,000 and $60,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days?

25.5

What does a high accounts receivable turnover ratio indicate?

customers are making payments very quickly

How is the accounts receivable turnover computed?

by dividing net credit sales by average receivables

The average collection period for receivables is computed by dividing 365 days by

accounts receivables turnover

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