Chapter 08 – Receivables
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DATE CREATED:
7/22/2017 6:23 PM
DATE MODIFIED:
10/16/2017 5:23 PM
98. When comparing the direct write-off method and the allowance method of accounting for uncollectible receivables, a
major difference is that the direct write-off method
a.
uses a percentage of sales method to estimate uncollectible accounts
b.
is used primarily by large companies with many receivables
c.
is used primarily by small companies with few receivables
d.
uses an allowance account
ANSWER:
c
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.08–05 – LO: 08–05
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.12 – Receivables Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:23 PM
DATE MODIFIED:
10/16/2017 5:23 PM
99. When a company uses the allowance method of accounting for uncollectible receivables, which entry would not be
found in the general journal?
a.
Bad Debt Expense 500
Allowance for Doubtful Accounts 500
b.
Bad Debt Expense 500
Accounts Receivable, Bob Smith 500
c.
Cash 300
Allowance for Doubtful Accounts 200
Accounts Receivable, Bob Smith 500
d.
Cash 500
Accounts Receivable, Bob Smith 500
ANSWER:
POINTS:
DIFFICULTY:
QUESTION TYPE:
HAS VARIABLES:
LEARNING OBJECTIVES:
ACCREDITING STANDARDS:
DATE CREATED:
DATE MODIFIED:
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100. When a company uses the allowance method of accounting for uncollectible receivables, the entry to reinstate a
previously written off account would include a
a.
credit to Bad Debt Expense
b.
debit to Bad Debt Expense
c.
debit to Allowance for Doubtful Accounts
d.
credit to Allowance for Doubtful Accounts
ANSWER:
POINTS:
DIFFICULTY:
QUESTION TYPE:
HAS VARIABLES:
LEARNING OBJECTIVES:
ACCREDITING STANDARDS:
DATE CREATED:
DATE MODIFIED:
101. The amount for which a promissory note is written is called the
a.
realizable value
b.
maturity value
c.
face value
d.
proceeds
ANSWER:
c
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.08–06 – LO: 08–06
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.12 – Receivables Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:23 PM
DATE MODIFIED:
10/16/2017 5:23 PM
102. The amount of the promissory note plus the interest earned on the due date is called the
a.
interest value
b.
maturity value
c.
face value
d.
issuance value
ANSWER:
b
POINTS:
1
Chapter 08 – Receivables
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Page 45
c.
dishonored
d.
discounted
ANSWER:
c
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.08–06 – LO: 08–06
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.12 – Receivables Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:23 PM
DATE MODIFIED:
10/16/2017 5:23 PM
108. The journal entry to record a note received from a customer to replace an account is
a.
debit Notes Receivable; credit Accounts Receivable
b.
debit Accounts Receivable; credit Notes Receivable
c.
debit Cash; credit Notes Receivable
d.
debit Notes Receivable; credit Notes Payable
ANSWER:
POINTS:
DIFFICULTY:
QUESTION TYPE:
HAS VARIABLES:
LEARNING OBJECTIVES:
ACCREDITING STANDARDS:
DATE CREATED:
DATE MODIFIED:
109. A $6,000, 60-day, 12% note recorded on November 21 is not paid by the maker at maturity. The journal entry to
recognize this event is
a.
debit Cash, $6,120; credit Notes Receivable, $6,120
b.
debit Notes Receivable, $6,120; credit Accounts Receivable, $6,000; credit Interest Receivable, $120
c.
debit Notes Receivable, $6,060; credit Accounts Receivable, $6,060
d.
debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; credit Interest Revenue, $120
ANSWER:
RATIONALE:
Chapter 08 – Receivables
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Page 50
c.
is credit sales divided by average receivables
d.
is not meaningful and therefore is not used
ANSWER:
a
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
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:
7/22/2017 6:23 PM
DATE MODIFIED:
10/16/2017 5:23 PM
119. Given the following information, compute accounts receivable turnover:
Gross sales $150,000
Accounts receivable, beginning of year $18,000
Sales 135,000
Accounts receivable, end of year 22,000
a.
6.75
b.
7.50
c.
6.13
d.
6.82
ANSWER:
a
RATIONALE:
Accounts Receivable Turnover = Sales / Average Accounts Receivable = $135,000 /
($18,000 + $22,000) = 6.75
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Moderate
QUESTION TYPE:
Multiple Choice
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:
7/22/2017 6:23 PM
DATE MODIFIED:
10/16/2017 5:23 PM
120. At the end of the current year, Accounts Receivable has a balance of $550,000; Allowance for Doubtful Accounts
has a credit balance of $5,500; and sales for the year total $2,500,000. An analysis of receivables estimates uncollectible
receivables as $25,000.
Determine the amount of the adjusting entry for bad debt expense and the adjusted balance of Allowance for Doubtful
Accounts, respectively.
a.
$19,500 and $25,000