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Chapter 08 - Receivables
ANSWER:
(a) Year 1: $956,000 ÷ [($120,500 + $110,000) ÷ 2] = 8.3
Year 2: $992,000 ÷ [($136,400 + $120,500) ÷ 2] = 7.7
(b) Year 1: [($120,500 + $110,000) ÷ 2] ÷ ($956,000 ÷ 365 days) = 44.0 days
Year 2: [($136,400 + $120,500) ÷ 2] ÷ ($992,000 ÷ 365 days) = 47.2 days
(c) In Year 1, Olmeck was better than the industry average; in Year 2, it was weaker
than the industry average.
POINTS:
1
DIFFICULTY:
Bloom's: Applying
Moderate
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.08-08 - LO: 08-08
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.23 - Financial Statement Analysis
ACCT.AICPA.FN.03 - Measurement
BUSPROG - Analytic
DATE CREATED:
10/5/2017 4:44 PM
DATE MODIFIED:
1/3/2018 4:04 PM
200. Under the direct write-off method of uncollectible accounts, the effect on the accounting equation of writing off a
customer’s account is
a.
an increase in assets and an increase in liabilities
b.
an increase in liabilities and a decrease in stockholders’ equity (expense)
c.
a decrease in assets and a decrease in liabilities
d.
a decrease in assets and a decrease in stockholders’ equity (expense)
ANSWER:
d
POINTS:
1
DIFFICULTY:
Bloom's: Applying
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.08-03 - LO: 08-03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 - Recording Transactions
ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG - Analytic
DATE CREATED:
10/5/2017 4:54 PM
DATE MODIFIED:
10/16/2017 5:23 PM
201. Under the direct write-off method of uncollectible accounts, if a written off account is later collected, the effect on
the accounting equation is
a.
an increase in assets and an increase in liabilities
b.
an increase in liabilities and a decrease in stockholders’ equity (expense)
c.
a decrease in assets and an increase in stockholders’ equity (expense)
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Page 91
206. What is the effect on the accounting equation when a company receives payment on a note receivable, including
interest?
ANSWER:
Assets both increase and decrease (Cash increases, Notes Receivable
decreases) and revenue increases by the amount of the interest.
POINTS:
1
DIFFICULTY:
Bloom's: Applying
Easy
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.08-06 - LO: 08-06
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 - Recording Transactions
ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
DATE CREATED:
10/5/2017 5:10 PM
DATE MODIFIED:
10/16/2017 5:23 PM
207. If a note receivable is dishonored, what is the effect on the accounting equation?
ANSWER:
Assets both increase and decrease (Accounts Receivable increases, Notes
Receivable decreases) and revenue increases by the amount of the interest.
POINTS:
1
DIFFICULTY:
Bloom's: Applying
Easy
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.08-06 - LO: 08-06
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 - Recording Transactions
ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG - Analytic
DATE CREATED:
10/5/2017 5:11 PM
DATE MODIFIED:
10/16/2017 5:23 PM
208. Suppose that at the end of the year there is an outstanding note receivable. The adjusting entry to recognize the
interest to be paid has what effect on the accounting equation?
ANSWER:
Assets (Interest Receivable) increase and stockholders’ equity (revenue)
increases.
POINTS:
1
DIFFICULTY:
Bloom's: Applying
Easy
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.08-06 - LO: 08-06
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 - Recording Transactions
ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG - Analytic
DATE CREATED:
10/5/2017 5:13 PM
