chapter 9 quiz

The basic issues in accounting for notes receivable include each of the following except

analyzing notes receivable

Trade accounts receivable are valued and reported on the balance sheet

at net realizable value

Bad Debt Expense is reported on the income statement as

an operating expense

A 90-day note dated May 18 has a maturity date of

August 16

When the allowance method is used to account for uncollectible accounts, Bad Debt Expense is debited when

management estimates the amount of uncollectibles

Short-term notes receivables

use the same estimations and computations as accounts receivable to determine cash realizable value

The interest rate specified in a note is for a

year

The interest rate specified on a note is for a

year

The maturity value of a $4800, 6%, 60-day note receivable dated February 10th is

$4848

The interest on a $5100, 6%, 60-day note receivable is

$51

The interest on a $9500, 8%, 1-year note receivable is

$760

Which of the following are also called trade receivables?

Accounts receivable

The net amount expected to be received in cash from receivables is termed the

Cash realizable value

Retailers generally consider sales from the use of national credit card sales as a

Cash sale

Sales resulting from the use of Visa and MasterCard credit cards are considered

Cash sales

The retailer considers Visa and MasterCard sales as

Cash sales

When a note is accepted to settle an open account, Notes Receivable is debited for the note's

Face value

A 30-day note dated June 13 has a maturity date of

July 13

When a note receivable is honored, Cash is debited for the note's

Maturity value

Which of the following receivables would not be classified as an "other receivable"?

Notes receivable

Which of the following approaches for bad debts is best described as a balance sheet method?

Percentage-of-receivables basis

Which of the following practices by a credit card company results in lower interest charges to the cardholder?

The card company allows a grace period before interest is accrued

Which of the following would require a compound journal entry?

To record collection of accounts receivable when a cash discount is taken

The term "receivables" refers to

amounts due from individuals or companies

Allowance for Doubtful Accounts is

a contra asset account

Bad Debt Expense is considered

a necessary risk of doing business on a credit basis

Receivables are frequently classified as

accounts receivable, notes receivable, and other receivables

Two methods of accounting for uncollectible accounts are the

direct write-off method and the allowance method

The direct write-off method of accounting for bad debts

does not require estimates of bad debt losses

The percentage of sales basis of estimating expected uncollectibles

emphasizes the matching of expenses with revenues

Notes receivable are recognized in the accounts at

face value

For an interest-bearing note, the amount due at maturity is the

face value of the note plus interest

When customers make purchases with a national credit card, the retailer

is not involved in the collection process

The two key parties to a promissory note are the

maker and the payee

A promissory note

may be used to settle an accounts receivable

The receivable that is usually evidenced by a formal instrument of credit is a(n)

note receivable

Claims for which formal instruments of credit are issued as proof of the debt are

notes receivable

Interest is usually associated with

notes receivable

A seller may encourage early payment by

offering a discount for early payment

Two bases for estimating uncollectible accounts are:

percentage of receivables and percentage of sales

The existing balance in Allowance for Doubtful Accounts is considered in computing bad debt expense in the

percentage of receivables basis

The method of accounting for uncollectible accounts that results in a better matching of expenses with revenues is the

percentage of sales method

Three accounting issues associated with accounts receivable are

recognizing, valuing, and disposing

A cash discount is usually granted to all of the following except

retail customers

The direct write-off method

shows only actual losses from uncollectible accounts receivable

The best managed companies will have

some accounts that will prove to be uncollectible

The face value of a note refers to the amount

that is identified on the formal instrument of credit

Notes or accounts receivables that result from sales transactions are often called

trade receivables