Filters
Question type
Study Flashcards

Marilyn Corporation uses the allowance method.Marilyn writes off a $560 customer account balance when it becomes clear that the customer will never pay.Marilyn should debit:


A) Bad Debt Expense and credit Accounts Receivable for $560.
B) Allowance for Doubtful Accounts and credit Accounts Receivable for $560.
C) Bad Debt Expense and credit Cash for $560.
D) Accounts Receivable and credit Bad Debt Expense for $560.

E) A) and D)
F) All of the above

Correct Answer

verifed

verified

Match the term and its definition.There are more definitions than terms. -Promissory Note


A) The portion of Accounts Receivable that the company expects to collect.
B) The time at which a loan must be repaid.
C) An agreement by a borrower to repay the lending company with interest during a specified time period.
D) The days of the year divided by the net sales revenue.
E) A financial statement that shows the calculation of Bad Debt Expense for a company.
F) Total money owed the company for sales made on credit.
G) An account that is debited for the amount of credit sales estimated as uncollectible.
H) A contra-asset account.
I) The time at which a borrower must make annual interest payments.
J) Net credit sales revenue divided by the average net receivables.
K) Net credit sales revenue divided by the net income.
L) The days of the year divided by the receivables turnover ratio.

M) J) and L)
N) C) and E)

Correct Answer

verifed

verified

PayPal and national credit card companies charge a fee for their services.How do sellers report these transaction fees on their financial statements?


A) As current assets on the balance sheet.
B) As a deduction from net sales revenue on the income statement.
C) As selling expenses on the income statement.
D) As cost of goods sold on the income statement.

E) B) and C)
F) All of the above

Correct Answer

verifed

verified

Quill Industries uses the aging of accounts receivable method.Its estimate of uncollectible receivables resulting from the aging analysis equals $20,000.The unadjusted credit balance in the Allowance for Doubtful Accounts account is $6,400.What is the estimated Bad Debt Expense for the period?


A) $6,400
B) $13,600
C) $20,000
D) $26,400

E) A) and B)
F) B) and C)

Correct Answer

verifed

verified

B

Match the term and its definition.There are more definitions than terms. -Write-Off


A) The process of removing specific customers' accounts deemed uncollectible.
B) When a company increases the amount of accounts receivable by adding the interest earned as accounts age without being collected.
C) How much money you can expect to earn over a period of time selling your goods.
D) Selling accounts receivable to another company for immediate cash.
E) Credit that a company receives when one good is exchanged for another.
F) Also known as net accounts receivable.
G) The length of the credit period and any discounts offered for prompt payment.
H) The amount of money lent.
I) A method of estimating uncollectible debts by forecasting the probability of not collecting late accounts.
J) The interest earned by money over a period of time.
K) A method of estimating uncollectible debts by looking at the historical average of credit sales not collected.
L) The account in which the estimated amount of accounts receivable expected to be uncollectible is recorded.

M) E) and F)
N) H) and L)

Correct Answer

verifed

verified

Kelton Inc.reported net credit sales of $450,000 for the current year.The unadjusted credit balance in its Allowance for Doubtful Accounts is $750.The company has experienced bad debt losses of 1% of credit sales in prior periods.Using the percentage of credit sales method,what amount should the company record as an estimate of Bad Debt Expense?


A) $3,750
B) $4,500
C) $4,470
D) $4,800

E) All of the above
F) A) and B)

Correct Answer

verifed

verified

Match the term and its definition.There are more definitions than terms. -Factoring


A) The process of removing specific customers' accounts deemed uncollectible.
B) When a company increases the amount of accounts receivable by adding the interest earned as accounts age without being collected.
C) How much money you can expect to earn over a period of time selling your goods.
D) Selling accounts receivable to another company for immediate cash.
E) Credit that a company receives when one good is exchanged for another.
F) Also known as net accounts receivable.
G) The length of the credit period and any discounts offered for prompt payment.
H) The amount of money lent.
I) A method of estimating uncollectible debts by forecasting the probability of not collecting late accounts.
J) The interest earned by money over a period of time.
K) A method of estimating uncollectible debts by looking at the historical average of credit sales not collected.
L) The account in which the estimated amount of accounts receivable expected to be uncollectible is recorded.

M) A) and G)
N) D) and H)

Correct Answer

verifed

verified

PayPal and national credit card companies charge Abbigail Company a 3% fee for their services.Abbigail Company's net sales revenue was $10,000 on the last weekend of November.How much cash will be deposited into Abbigail's bank account as a result of these sales?


A) $30
B) $9,700
C) $10,000
D) $10,030

E) All of the above
F) B) and C)

Correct Answer

verifed

verified

Interest revenue from notes receivable is typically reported on a multiple step income statement as a part of Income from Operations.

A) True
B) False

Correct Answer

verifed

verified

Legacy Company uses the aging of accounts receivable method.The company performed an aging of accounts receivable on December 31 and gathered the following information: Legacy Company uses the aging of accounts receivable method.The company performed an aging of accounts receivable on December 31 and gathered the following information: What is the amount of Accounts Receivable,Net that will be reported on the balance sheet at December 31? A) $404,000 B) $396,800 C) $373,600 D) $412,800 What is the amount of Accounts Receivable,Net that will be reported on the balance sheet at December 31?


A) $404,000
B) $396,800
C) $373,600
D) $412,800

E) A) and D)
F) B) and D)

Correct Answer

verifed

verified

The aging of accounts receivable method is based upon the principle that the longer an account is overdue,the higher the risk of nonpayment.

A) True
B) False

Correct Answer

verifed

verified

Samberg Inc.had the following transactions. Oct.1 - Sold $10,000 of merchandise on account,1/10,n/30 to McCormick Industries. Nov.1 - Received a $10,000,90-day,10% note from McCormick Industries to settle its $10,000 unpaid balance. Dec.31 - Accrued interest on the note.(Round your answer to the nearest whole dollar amount. ) Jan.31 - Received the interest on the note's maturity date. Jan.31 - Received the principal on the note's maturity date.(Round your answer to the nearest whole dollar amount. ) Required: Prepare the required journal entries.

Correct Answer

verifed

verified

December 31
Interest Revenue:$...

View Answer

On January 1,a company lends $90,000 to a customer for one year at a 7% annual interest rate.The note requires the payment of interest twice each year on June 30 and December 31.The company records adjusting entries on a monthly basis.At the end of each month in which the company does not receive any interest payments,the company:


A) records an entry with a debit to Cash of $525 and a credit to Interest Revenue of $525.
B) records an entry with a debit to Notes Receivable of $525 and a credit to Cash of $525.
C) records an entry with a debit to Interest Receivable of $525 and a credit to Interest Revenue of $525.
D) does not record an adjusting entry,since no transaction has occurred.

E) C) and D)
F) All of the above

Correct Answer

verifed

verified

C

The direct write-off method for uncollectible accounts is not allowed by either GAAP or IFRS,but is required by the Internal Revenue Service (IRS)for tax purposes.

A) True
B) False

Correct Answer

verifed

verified

Using its aging of accounts receivable,Age Old,Inc.estimates that $90,000 of its $4,000,000 of accounts receivable will be uncollectible.Prior to making its adjusting entry,the unadjusted Allowance for Doubtful Accounts has a credit balance of $1,000.After the adjustment,the:


A) Allowance for Doubtful Accounts will have a $90,000 credit balance.
B) Allowance for Doubtful Accounts will have an $89,000 credit balance.
C) Allowance for Doubtful Accounts will have a $91,000 credit balance.
D) Bad Debt Expense will equal $90,000.

E) B) and D)
F) A) and D)

Correct Answer

verifed

verified

A

Which of the following statements about methods of accounting for bad debts is correct?


A) When the allowance method is used,the journal entry to write-off an uncollectible account does not change the amount reported as Accounts Receivable,Net on the balance sheet.
B) The two methods of accounting for bad debts that are acceptable under GAAP are the allowance method and the direct write-off method.
C) When the allowance method is used,Bad Debt Expense is equal to the write-offs that occurred during the period.
D) When the allowance method is used,if actual results differ from the estimates,the prior year financial statements must be corrected.

E) A) and C)
F) B) and D)

Correct Answer

verifed

verified

A low accounts receivable turnover ratio indicates:


A) the company's sales are increasing.
B) a large proportion of the company's sales are on credit.
C) customers are making payments slowly.
D) the company is taking longer to sell inventory.

E) B) and C)
F) A) and B)

Correct Answer

verifed

verified

Carrington Company uses the allowance method for recording bad debts.On February 1,Carrington wrote off a $3,500 customer account balance when it became clear that the particular customer would never pay.On May 29,Carrington unexpectedly received a check for $3,500 from the customer.On May 29,Carrington will:


A) Debit Cash and credit Bad Debt Expense for $3,500;debit Accounts Receivable and credit Allowance for Doubtful Accounts for $3,500.
B) Debit Allowance for Doubtful Accounts and credit Accounts Receivable for $3,500;debit Cash and credit Bad Debt Expense for $3,500.
C) Debit Accounts Receivable and credit Allowance for Doubtful Accounts for $3,500;debit Cash and credit Accounts Receivable for $3,500.
D) Debit Allowance for Doubtful Accounts and credit Bad Debt Expense for $3,500;debit Cash and credit Accounts Receivable for $3,500.

E) A) and B)
F) B) and C)

Correct Answer

verifed

verified

Which of the following situations depicts the best receivables management?


A) Receivables turnover ratio increases and the days to collect decreases.
B) Receivables turnover ratio increases and the days to collect increases.
C) Receivables turnover ratio decreases and the days to collect increases.
D) Receivables turnover ratio decreases and the days to collect decreases.

E) C) and D)
F) B) and D)

Correct Answer

verifed

verified

Libre,Inc.has experienced bad debt losses of 4% of credit sales in prior periods.At the end of the year,the balance of Accounts Receivable is $100,000 and the Allowance for Doubtful Accounts has an unadjusted credit balance of $500.Net credit sales during the year were $150,000.Using the percentage of credit sales method,what is the estimated Bad Debt Expense for the year?


A) $4,000
B) $5,600
C) $6,000
D) $6,400

E) A) and B)
F) A) and C)

Correct Answer

verifed

verified

Showing 1 - 20 of 240

Related Exams

Exam 1

Business Decisions and Financial Accounting

228 Questions

Exam 2

The Balance Sheet

223 Questions

Exam 3

The Income Statement

233 Questions

Exam 4

Adjustments,Financial Statements,and Financial Results

252 Questions

Exam 5

Fraud,Internal Control,and Cash

187 Questions

Exam 6

Merchandising Operations and the Multistep Income Statement

209 Questions

Exam 7

Inventory and Cost of Goods Sold

218 Questions

Exam 9

Long-Lived Tangible and Intangible Assets

299 Questions

Exam 10

Liabilities

260 Questions

Exam 11

Stockholders Equity

278 Questions

Exam 12

Statement of Cash Flows

222 Questions

Exam 13

Measuring and Evaluating Financial Performance

183 Questions

Show Answer