ACCT 2101 Chapter 5

Tudor Corp. has an ending balance in the accounts receivable account of $20,000. Tudor recorded bad debt expense of $1,000. Tudor has an ending balance in the allowance for uncollectible accounts of $2,000. What is the net accounts receivable balance?

18.000

Which information regarding the receivables turnover ratio is true? Multiple select question. The lower the ratio, the better the company is performing. It provides an indication of a company's efficiency in collecting receivables. It shows the number of days it takes to collect accounts receivable. It shows the number of times during a period that the average accounts receivable balance is collected.

It provides an indication of a company's efficiency in collecting receivables. It shows the number of times during a period that the average accounts receivable balance is collected.

The allowance for uncollectible accounts is a contra account to Multiple choice question. revenue. sales allowances. bad debt expense. accounts receivable.

accounts receivable.

A company that expects that some of its customers will not pay the agreed upon sales price must utilize the Multiple choice question. bad debt method Reason: the correct term is allowance method direct write-off method debt forgiveness method allowance method

allowance method

A partial adjustment to the amount owed by the customer for goods that were not returned, but did not fully meet the customer's expectations is referred to as a sales discount. debit. credit. allowance.

allowance.

With the allowance method, bad debt expense is recorded Multiple choice question. when the customer returns the product. at the end of the period when bad debts are estimated. when the account becomes uncollectible. Reason: The direct write off method records a bad debt when the debt becomes bad. when the customer purchases the goods.

at the end of the period when bad debts are estimated.

A(n)----------balance before adjustment indicates that the estimate of uncollectible accounts at the beginning of the year may have been too high.

credit

If the allowance for uncollectible accounts is 25% of year-end accounts receivable, this might indicate Multiple choice question. customers are taking the sales discount. credit policies are too lenient. the company has tightened credit policies. customers have returned excessive amounts of merchand

credit policies are too lenient.

A sales allowance Blank______ the amount owed by the customer for merchandise that is Blank______ by the customer. Multiple choice question. increased; retained increases; returned decreases; retained decreases; returned

decreases; retained

The Accounts Receivable account is reduced when the seller: Multiple choice question. records the allowance for uncollectible accounts adopts the allowance method determines that a specific customer account will not be collectible

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.) disguise real prices from competitors change prices without publishing a new catalog give quantity discounts to customers reduce the sale price for interest received encourage customers to pay quickly

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

Because some of the amounts reported in financial statements are based on ---------- some of the information may be inaccurate.

estimates

The difference between total accounts receivable and the allowance for uncollectible accounts is referred to as: Multiple choice question. realized accounts receivable net accounts receivable gross accounts receivable

net accounts receivable

Receivables not expected to be collected should Multiple choice question. initially be included as assets and then be written off when the customer does not pay. not be counted in assets of the company. always be counted in assets of the company.

not be counted in assets of the company.

wo entries are required when a previously written off account is collected. These two entries include: record the adjustment to sales record bad debt expense record the collection on the account receivable reinstate the account receivable

record the collection on the account receivable reinstate the account receivable

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

sales on account. credit sales.

A high ratio of allowance for uncollectible accounts to total accounts receivable can indicate: (Select all that apply.) Multiple select question. the company extends too much credit the company's customers are high-risk stringent credit policies the company should extend additional credit

the company extends too much credit the company's customers are high-risk

Accounts receivable are typically classified as current assets because Multiple choice question. they are matched with accounts payable for the period. they will be converted to cash within 1 year. they are a formal agreement to pay within a specific period of time. they accrue interest at a specified interest rate.

they will be converted to cash within 1 year.