accounting week 5

When an account previously written off is collected in full, which is required to ensure the accounting for the complete payment history of the customer?

An entry to reinstate the account receivable and an entry to record payment.

Raven receives a 3-year note receivable from a customer for goods sold. How should Raven report this note receivable in its financial statements?

As a noncurrent asset

Amend Inc. debited Accounts Receivable and credited Allowance for Uncollectible Accounts to reestablish an account previously written off. Amend Inc. should also debit _______ and credit _______.

Cash; Accounts Receivable

Where is a note receivable reported in the balance sheet?

In either current or noncurrent assets, as appropriate.

What is the formula for the receivables turnover ratio?

Net credit sales divided by average accounts receivable (net).

An informal credit arrangement with a customer for payment to be received after the sale is classified as a(n)

account receivable

A company that expects that some of its customers will not pay the agreed upon sales price must utilize the

allowance method

Accounts receivable should be classified as a(n)

asset

The formula to compute the receivables turnover ratio is net credit sales divided by

average accounts receivable.

Compared to other methods of estimating uncollectible accounts, the aging of accounts receivables method tends to

be more accurate

Sales to customers in which the customers pay within 30 to 60 days are referred to as (Select all that apply.) Multiple select question. nonaccrued sales. credit sales. deferred sales. sales on account.

credit sales sales on account

The Accounts Receivable account is reduced when the seller:

determines that a specific customer account will not be collectible

A trade discount is a reduction from the list price, which is used to: (Select all that apply.) Multiple select question. disguise real prices from competitors change prices without publishing a new catalog reduce the sale price for interest received give quantity discounts to customers encourage customers to pay quickly

disguise real prices from competitors change prices without publishing a new catalog give quantity discounts to customers

Under the allowance method, companies estimate _____ uncollectible amounts and report those estimates in the _____ year.

future current

Receivables not expected to be collected should

not be counted in assets of the company.

Two entries are required when a previously written off account is collected. These two entries include:

reinstate the account receivable record the collection on the account receivable

Accounts receivable are typically classified as current assets because

they will be converted to cash within 1 year.