Orion Ch 8- Reporting and Analyzing Receivables

Your page rank:

Total word count: 1680
Pages: 6

Calculate the Price

- -
275 words
Looking for Expert Opinion?
Let us have a look at your work and suggest how to improve it!
Get a Consultant

Q 8.1: What are notes or accounts receivables that result from sales transactions often called?

A :
sales receivables

B :
merchandise receivables

C :
non-trade receivables

D :
trade receivables

D : trade receivables

Q 8.2: ________ are also called trade receivables.

A :
Accounts receivable

B :
Other receivables

C :
Income taxes refundable

D :
Advances to employees

A : Accounts receivable

Q 8.3: ________ are three accounting issues associated with accounts receivable.

A :
Recognizing, valuing, and disposing

B :
Depreciating, returns, and valuing

C :
Depreciating, valuing, and collecting

D :
Accrual, bad debts, and disposing

A : Recognizing, valuing, and disposing

Q 8.4: The net amount expected to be received in cash from receivables is termed the _____ _____
value.

A) Cash realizable
B) Cash Equivalent

A) Cash realizable

Q 8.5: When would a credit card holder receive lower interest charges?

A :
when the card company states interest as a monthly percentage rather than an annual percentage

B :
when the card company allows a grace period before interest is accrued

C :
when the card company calculates finance charges from the date of purchase to the date the amount is paid

D :
when the card company allows cardholders to skip payments on their cards

B : when the card company allows a grace period before interest is accrued

Q 8.6: Writing off an uncollectible account affects ________ under the allowance method.

A :
all financial statements

B :
only income statement accounts

C :
only balance sheet accounts

D :
both balance sheet and income statement accounts

C : only balance sheet accounts

Q 8.7: What is the Bad Debts Expense considered?

A :
an internal control weakness

B :
an avoidable cost in doing business on a credit basis

C :
avoidable unless there is a recession

D :
a necessary risk of doing business on a credit basis

D : a necessary risk of doing business on a credit basis

Q 8.8: The balance of Allowance for Doubtful Accounts prior to making the adjusting entry to record estimated uncollectible accounts _____
relevant when using the percentage of receivables basis.

a) is
b) is not

a) is

Q 8.9: The entry to recognize the bad debt expense ________ when the allowance method is used.

A :
has no effect on current assets

B :
has no effect on net income

C :
decreases current assets

D :
increases net income

C : decreases current assets

Q 8.10: What are the two key parties to a promissory note?

A :
maker and the payee

B :
debtor and the payee

C :
sender and the receiver

D :
maker and a bank

A : maker and the payee

Q 8.11: Maynard Mills received a 60-day, 5% note for $10,000 on April 5th. Which of the following statements is true?

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

B :
Maynard Mills should record a total receivable due of $10,500 on April 5th.

C :
The maturity value of this note is $10,000.

D :
Maynard Mills will receive $10,000 plus interest of $500 at maturity.

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

Q 8.12: Which of the following statements about a note receivable is true?

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

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

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

D :
It can only be collected by a bank.

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

Q 8.13: 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 :
interest revenue is never recorded

D :
the maturity value of the note is written off

A : accounts Receivable is debited if eventual collection is expected

Q 8.14: When a note receivable is honored, Cash is debited for the note’s

A :
maturity value.

B :
fair value.

C :
market value.

D :
face value.

A : maturity value.

Q 8.15: A debit to ________ is entered to record the dishonor of a note receivable assuming the payee expects eventual collection.

A :
Allowance for Doubtful Accounts

B :
Accounts Receivable

C :
Note Receivable

D :
Cash

B : Accounts Receivable

Q 8.16: Which of the following statements concerning receivables are true? Select all that apply.
A : Notes receivable are often listed last under receivables.
B : The contingent liability from selling notes receivable should be disclosed.
C : Both the gross amount of receivables and the allowance for doubtful accounts should be reported.
D : Interest revenue and gain on sale of notes receivable are shown under other revenues and gains.

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

Q 8.17: How is the average collection period computed?

A :
by dividing 365 days by the accounts receivable turnover ratio

B :
by dividing net credit sales by ending gross accounts receivable

C :
by dividing the accounts receivable turnover ratio by 365 days

D :
by dividing net credit sales by average gross accounts receivable

A : by dividing 365 days by the accounts receivable turnover ratio

Q 8.18: 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 retailer receives more cash from the credit card issuer

B :
the issuer does the credit investigation of customers

C :
the issuer undertakes the collection process

D :
all of the choices are correct

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

Q 8.19: The retailer ________ when customers use national credit cards to make purchases.

A :
is not involved in the collection process

B :
is responsible for maintaining customer accounts

C :
absorbs any losses from uncollectible accounts

D :
receives cash equal to the full price of the merchandise sold from the credit card company

A : is not involved in the collection process

Q 8.20: When a factor buys accounts receivable, the charge for the factor’s commission is recorded as

A :
Commission Expense.

B :
Service Charge Expense.

C :
Bad Debts Expense.

D :
Loss on Sale of Receivables.

B : Service Charge Expense.

Q 8.21: All of the following are principles of managing accounts receivable EXCEPT

A :
monitoring collections.

B :
determining from which vendor credit should be requested.

C :
establishing a payment period.

D :
accelerating cash receipts from receivables when necessary.

B : determining from which vendor credit should be requested.

Q 8.22: The average collection period for receivables is computed by dividing 365 days by which of the following?

A :
accounts receivable turnover

B :
average accounts receivable

C :
net credit sales

D :
ending accounts receivable

A accounts receivable turnover

Q 8.23: Another name for trade receivables, which result from sales transactions, is

A :
advances to employees.

B :
refundable income taxes.

C :
accounts receivable.

D :
other receivables.

C : accounts receivable.

Q 8.24: Two methods of accounting for uncollectible accounts are the direct write-off method and the accrual method.

A :
True

B :
False

B : False

Q 8.25: When the allowance method is used, current assets increase when an entry recognizes bad debts.

A :
True

B :
False

B : False

Q 8.26: Writing off an uncollectible account affects the balance sheet account and ______
affect the income statement accounts under the allowance method.

a) does
b) does not

b) does not

The _____
amount expected to be collected from receivables is the cash realizable value.

a) gross
b) net

b) net

Q 8.28: A written promise of amounts to be received as the result of a sales transaction, a note or account receivable is often called a

A :
non-trade receivable.

B :
merchandise receivable.

C :
trade receivable.

D :
sales receivable.

C : trade receivable.

Q 8.29: When a company receives an interest-bearing note receivable, it will ______
Notes Receivable for the face value of the note.

a) debit
b) credit

a) debit

Q 8.30: What is represented by the following formula?
Face Value of Note × Annual Interest Rate × Time in Terms of One Year = Interest

A :
the basic formula for a year’s worth of interest on a note.

B :
the basic formula for computing interest on an interest-bearing note.

C :
a way of finding the lowest interest on a note.

D :
a way of determining if an interest-bearing note will prove worthwhile for the payee.

B the basic formula for computing interest on an interest-bearing note.

Q 8.31: If a company receives a 60-day, 5% note for $5,000 on September 5, which of the following statement is true?

A :
The maturity value of the note is $5,000.

B :
The company should receive $5,000 plus interest of $250 at maturity.

C :
The company should receive the principal of the note plus interest in early November.

D :
The company should record a total receivable due of $5,000 on September 5.

C : The company should receive the principal of the note plus interest in early November.

Q 8.32: Short-term
_____ _____
use the same estimations and computations as accounts receivable to determine cash realizable value.

notes receivable

Q 8.33: A(n) ________ may be used to settle accounts receivable.

A :
NSF stamp

B :
promissory note

C :
bill of attainder

D :
collection notice

B : promissory note

Q 8.34: A promissory note may be used to settle accounts receivable.

A :
True

B :
False

A : True

Q 8.35: A note receivable can be transferred ________ by endorsement.

A :
to another party

B :
into Bad Debts Expense

C :
within the bookkeeping department

D :
to Accounts Payable

A : to another party

Q 8.36: When calculating interest on a promissory note with the maturity date stated in terms of days, the payer receives _____
interest if 360 days are used instead of 365.

a) more
b) less

a) more

Q 8.37: Being transferrable to another party by endorsement _____
one of the characteristics of a note receivable.

a) is
b) is not

a) is

Q 8.38: When the due date of a note is stated in months, what is the time factor in computing interest?

A :
the number of months divided by 30 days

B :
the number of months divided by 360 days

C :
the number of months divided by 12

D :
the number of months divided by 0.12

C : the number of months divided by 12

Q 8.39: In a promissory note, the party who will be paid is called the ______
.

I got this question wrong, and I didn’t get the answer. Sorry! =(

An annual rate of interest would be _____
way in which to state the interest rate for a three-month loan.

a) the normal

b) an unusual

a) the normal

Share This
Flashcard

More flashcards like this

NCLEX 10000 Integumentary Disorders

When assessing a client with partial-thickness burns over 60% of the body, which finding should the nurse report immediately? a) ...

Read more

NCLEX 300-NEURO

A client with amyotrophic lateral sclerosis (ALS) tells the nurse, "Sometimes I feel so frustrated. I can’t do anything without ...

Read more

NASM Flashcards

Which of the following is the process of getting oxygen from the environment to the tissues of the body? Diffusion ...

Read more

Unfinished tasks keep piling up?

Let us complete them for you. Quickly and professionally.

Check Price

Successful message
sending