Question 1

Under the allowance method for uncollectible accounts, the net realizable value of receivables is the same both before and after an account has been written off.

Accepted Answer

A) True 
 B)False

Question 2

A dishonoured note receivable

Accepted Answer

A)  is paid in full at its maturity date.
B)  is no longer a negotiable instrument.
C)  can be used in place of a cheque.
D)  can only be collected by a bank.E) A) and C)
F) A) and B)

Question 3

A subsidiary ledger is a group of accounts that provides details about a control account in the general ledger.

Accepted Answer

A) True 
 B)False

Question 4

Under the allowance method for uncollectible accounts, Bad Debts Expense is debited when an account is deemed uncollectible and must be written off.

Accepted Answer

A) True 
 B)False

Question 5

Bad Debts Expense is reported on the income statement as

Accepted Answer

A)  part of cost of goods sold.
B)  an expense subtracted from gross sales to determine net sales.
C)  an operating expense.
D)  a non-operating expense.E) A) and C)
F) B) and C)

Question 6

Bad Debts Expense is a contra account to the Sales account.

Accepted Answer

A) True 
 B)False

Question 7

When the due date of a note is stated in months, the time factor in calculating interest, if it is due monthly, is the number of months divided by 12.

Accepted Answer

A) True 
 B)False

Question 8

Trade receivables can be accounts receivable or notes receivable.

Accepted Answer

A) True 
 B)False

Question 9

When a subsidiary ledger and a control account are used, each journal entry that affects accounts receivable must be posted twice.

Accepted Answer

A) True 
 B)False

Question 10

To find the balance due from an individual customer, the accountant would refer to the

Accepted Answer

A)  General Journal.
B)  Sales account in the general ledger.
C)  Accounts Receivable subsidiary ledger.
D)  Accounts Receivable account in the general ledger.E) C) and D)
F) A) and B)

Question 11

The journal entry to record a credit card sale using a nonbank credit card (for example, Canadian Tire or Sears)  includes a debit to the

Accepted Answer

A)  Cash account.
B)  Accounts Receivable account.
C)  Bank Charges Expense account.
D)  Sales account.E) None of the above
F) All of the above

Question 12

Receivables are considered to be financial assets.

Accepted Answer

A) True 
 B)False

Question 13

The receivables turnover ratio is calculated by dividing gross credit sales by the average net receivables during the year.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

A receivable is recognized when the sales effort is substantially complete.

Accepted Answer

A) True 
 B)False

Question 16

Account for notes receivable.

Accepted Answer

Notes receivable are recorded at their p...

Question 17

Estimated uncollectibles are recorded as a debit to

Accepted Answer

A)  Allowance for Doubtful Accounts.
B)  Bad Debts Expense.
C)  Sales.
D)  Accounts Receivable.E) C) and D)
F) B) and D)

Question 18

Uncollectible accounts must be estimated because it is not possible to know which accounts will not be collected.

Accepted Answer

A) True 
 B)False

Question 19

Trade receivables occur when two companies trade or exchange notes receivables.

Accepted Answer

A) True 
 B)False

Question 20

The total interest on a $10,000, 4%, 3-month note receivable is

Accepted Answer

A)  $ 100.
B)  $ 200.
C)  $ 400.
D)  $1,200.E) A) and B)
F) C) and D)

Exam 8: Reporting and Analyzing Receivables

The total interest on a $10,000, 4%, 3-month note receivable is

Correct AnswerverifiedShow Answer

Trade receivables can be accounts receivable or notes receivable.

Correct AnswerverifiedShow Answer

A receivable is recognized when the sales effort is substantially complete.

Correct AnswerverifiedShow Answer

Uncollectible accounts must be estimated because it is not possible to know which accounts will not be collected.

Correct AnswerverifiedShow Answer

The receivables turnover ratio is calculated by dividing gross credit sales by the average net receivables during the year.

Correct AnswerverifiedShow Answer

Account for notes receivable.

Correct AnswerverifiedNotes receivable are recorded at their p...View AnswerShow Answer

Bad Debts Expense is a contra account to the Sales account.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Bad Debts Expense is reported on the income statement as

Correct AnswerverifiedShow Answer

When a subsidiary ledger and a control account are used, each journal entry that affects accounts receivable must be posted twice.

Correct AnswerverifiedShow Answer

Under the allowance method for uncollectible accounts, Bad Debts Expense is debited when an account is deemed uncollectible and must be written off.

Correct AnswerverifiedShow Answer

Estimated uncollectibles are recorded as a debit to

Correct AnswerverifiedShow Answer

Under the allowance method for uncollectible accounts, the net realizable value of receivables is the same both before and after an account has been written off.

Correct AnswerverifiedShow Answer

A dishonoured note receivable

Correct AnswerverifiedShow Answer

A subsidiary ledger is a group of accounts that provides details about a control account in the general ledger.

Correct AnswerverifiedShow Answer

The journal entry to record a credit card sale using a nonbank credit card (for example, Canadian Tire or Sears) includes a debit to the

Correct AnswerverifiedShow Answer

To find the balance due from an individual customer, the accountant would refer to the

Correct AnswerverifiedShow Answer

Receivables are considered to be financial assets.

Correct AnswerverifiedShow Answer

Trade receivables occur when two companies trade or exchange notes receivables.

Correct AnswerverifiedShow Answer

When the due date of a note is stated in months, the time factor in calculating interest, if it is due monthly, is the number of months divided by 12.

Correct AnswerverifiedShow Answer

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Notes receivable are recorded at their p...
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