ACTY Ch 5 HW
The allowance method is required by
GAAP
net revenue=
Total Revenue (-) Sales Discounts (-) Sales Returns (-) Sales Allowances
Accounts receivable should be classified as a(n) Multiple choice question. liability. revenue. expense. asset.
asset
A sales return occurs when a customer returns a product for a full refund, whereas a sales ----is when the customer keeps the product and obtains a partial refund.
allowance
Identify the likely advantage of extending credit to customers. Multiple Choice Increased sales. Fewer expenses. Lower accounts receivable. Reduced amounts owed to creditors.
increased sales
An aging schedule classifies accounts receivable based on Multiple choice question. past experience with customer. customer credit rating. length of time outstanding. size of customer purchase.
length of time outstanding
The formula for average collection period is: Multiple Choice 365 days divided by average accounts receivable. Net credit sales divided by average accounts receivable. 365 days divided by the receivable turnover ratio. 365 days divided by net credit sales.
365 days divided by the receivable turnover ratio
A company had the following information taken from various accounts at the end of the year: Sales discounts$41,000 Deferred revenues$32,000 Total revenues$459,000 Purchase discounts$15,000 Sales allowances$35,000 Accounts receivable$205,000 What was the company's net revenues for the year?
383,000
On February 1, 2021, Miter Corp. lends cash and accepts a $1,000 note receivable that offers 12% interest and is due in six months. How much interest revenue will Miter Corp. report during 2021?
60 1000 x .12 x 6/12
A company has the following information: Total revenues$860,000 Sales returns and allowances$50,000 Sales discounts$30,000 Ending inventory$100,000 What is the amount of net revenues for the company?
780000
A company that expects that some of its customers will not pay the agreed upon sales price must utilize the Multiple choice question. allowance method debt forgiveness method bad debt method direct write-off method
allowance method
When customers purchase goods on account, Spitz Manufacturing offers them a 2% reduction in the amount owed if they pay within 10 days. This is an example of a: Sales allowance. Bad debt. Sales discount. Sales return.
sales discount
The amount of cash owed to a company by its customers from the sale of goods or services on account is commonly referred to as: Multiple Choice Accounts payable. Accounts receivable. Revenue. Cash.
accounts receivable
True or false: Accounts receivable not expected to be collected should be counted in the assets of the company until they are later written off.
fase
One advantage of the allowance method for accounting for uncollectible accounts is that the company reports: Multiple Choice Bad debt expense in the same period as the credit sale. Fewer returns by customers. Greater total cash collected from customers. Greater total sales to customers.
bad debt expense in the same period as the credit sale
The purpose of recording an allowance for uncollectible accounts is to: Multiple Choice Report accounts receivable at the net amount of cash expected to be collected. Report net sales conservatively. Report accounts receivable for the total amount of sales in the period. Record the sales returns and allowances.
report accounts rec at the net amount of cash expected to be collected
Pixie Inc. writes off a specific accounts receivable. If Pixie is using the allowance method, the write off will Blank______ net income. Multiple choice question.
not effect
Which of the following is a discount in the amount to be paid if the customer pays within a specified time period? Multiple choice question. Quantity discount Sales discount Purchase discount Trade discount
sales discount
On August 4, Sanders provides services to Frederickson for $5,000, terms 3/10, n/30. Frederickson pays for the services on August 12. What amount would Sanders record as revenue on August 4? Multiple Choice $5,150. $5,000. $5,300. $4,850.
5,000
Schmidt Company's Accounts Receivable balance is $100,000, its adjusted balance in Allowance for Uncollectible Accounts is $4,000, and its bad debt expense is $3,800. The net amount of accounts receivable is: Multiple Choice $96,000. $96,200. $104,000. $100,000.
96,000
At December 31, Gill Co. reported accounts receivable of $259,000 and an allowance for uncollectible accounts of $1,100 (credit) before any adjustments. An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 6% of accounts receivable. The amount of the adjustment for uncollectible accounts would be:
14,440 (259000 x 6%) - 1100
For accounts receivable, the longer an account is outstanding, Multiple choice question. the more likely it will prove uncollectible. the higher probability of it being collected. the better the customer. the more likely the customer will return.
the more likely it will prove uncollectible
Tom's Textiles shipped the wrong material to a customer, who refused to accept the order. This is an example of a: Multiple Choice Sales return. Sales revenue. Sales discount. Sales allowance.
sales return
Tom's Textiles shipped the wrong material to a customer, who refused to accept the order. This is an example of a: Multiple Choice Sales revenue. Sales return. Sales discount. Sales allowance.
sales return
When a customer returns a product for a refund, in which account is the entry recorded? Multiple choice question. sales return purchase return sales discount purchase discount
sales return
A cash discount representing a reduction in the amount to be paid by a credit customer if the customer pays within a specified period of time is also referred to as a
cash discount
allowance for uncollectible accounts is
contra asset account
A sales allowance Blank______ the amount owed by the customer for merchandise that is Blank______ by the customer. Multiple choice question. decreases; returned increased; retained increases; returned decreases; retained
decreases, retained
Identify the primary disadvantage of extending credit to customers. Multiple Choice Lower revenues. Delay or failure to collect cash. Reduced operating efficiency. Lower profitability.
delay or failure to collect cash
Which method is not allowed under Generally Accepted Accounting Principles for the purpose of accounting for uncollectible accounts? Aging method. Allowance method. Percentage-of-receivables method. Direct write-off method.
direct write-off method
Gwendolyn uses the allowance method to account for uncollectible receivables. Gwendolyn should record Blank______ bad debt expense Blank______. Multiple choice question. actual; when accounts are written off actual; at the end of the year estimated; when accounts are written off estimated; at the end of the year
estimated, at the end of the year
(Face value x annual interest rate x fraction of the annual period) is the formula for Multiple choice question. sales price of a good. bad debt expense. issue price of a security. interest on a note.
interest on a note
For accounts receivable, the longer an account is outstanding, the: Multiple Choice Better the customer. More likely it will prove uncollectible. More likely the customer will return. Higher probability of it being collected.
more likely it will prove uncollectible
The amount of cash that is actually expected to be collected on accounts receivable is referred to as: Multiple Choice Net revenue. Allowance for uncollectible accounts. Net accounts receivable. Net income.
net accounts receivable
When using an aging method for estimating uncollectible accounts: Multiple Choice Older accounts are considered less likely to be collected. The number of days the account is past due is not considered. No estimate of uncollectible accounts is made. Older accounts are considered more likely to be collected.
older accounts are considered less likely to be collected
When merchandise is returned for a refund or for credit to be applied to other purchases, the situation is called a
sales return
The percentage-of-receivables method of estimating bad debt applies Blank______ to Blank______. Multiple choice question. a single percentage; accounts receivable various percentages; accounts receivable a single percentage; total sales various percentages; total sales
single percentage, accounts rec
At December 31, Gill Co. reported accounts receivable of $247,000 and an allowance for uncollectible accounts of $900 (debit) before any adjustments. An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 4% of accounts receivable. The amount of the adjustment for uncollectible accounts would be:
10,780 (247000 x 4%) + 900
A company reports the following information for the year: Net credit sales$110,000Average accounts receivable 10,000Cash collections on credit sales 100,000 What is the company's receivables turnover ratio?
11.0
On September 1, 2021, Middleton Corp. lends cash and accepts a $4,300 note receivable that offers 8% interest and is due in six months. How much interest revenue will Middleton Corp. report during 2021? (Do not round intermediate calculations. Round your answer to the nearest dollar amount.)
115 4300 x 8% x 4/12
On September 1, 2021, Middleton Corp. lends cash and accepts a $6,000 note receivable that offers 12% interest and is due in six months. How much interest revenue will Middleton Corp. report during 2022? (Do not round intermediate calculations. Round your answer to the nearest dollar amount.)
120 6,000 x 12% x 2/12
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? Multiple choice question. $20,000 $18,000 $17,000 $19,000
18,000
A company had the following information taken from various accounts at the end of the year: Sales discounts$41,000 Deferred revenues$32,000 Total revenues$459,000 Purchase discounts$15,000 Sales allowances$35,000 Accounts receivable$205,000 What was the company's net revenues for the year? Multiple Choice $434,000. $437,000. $368,000. $383,000. PrevQuestion 9 of 20 Total
383,000
0-30 days$100,0001% 31-60 days60,0002% 61-90 days20,0003% Over 90 days50,0004% Using the aging method, determine the ending balance in the allowance for uncollectible accounts
4,800
Green Company has net credit sales of $100,000, an asset turnover ratio of 4, and a receivables turnover ratio of 9. What is the average collection period? Multiple choice question. 11.1 days 40.6 days 36 days 25 days
40.6
Green Company has net credit sales of $100,000, an asset turnover ratio of 4, and a receivables turnover ratio of 9. What is the average collection period? Multiple choice question. 40.6 days 36 days 25 days 11.1 days
40.6
At December 31, Gill Co. reported accounts receivable of $238,000 and an allowance for uncollectible accounts of $600 (credit) before any adjustments. An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 3% of accounts receivable. The amount of the adjustment for uncollectible accounts would be: Multiple Choice $7,140. $7,740. $6,540. $7,800.
6,540
A formal credit arrangement between a creditor and debtor is called a(n) Multiple choice question. note receivable. account receivable. trade receivable. interest receivable.
a noncurrent asset
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 Multiple choice question. debit. discount. credit. allowance.
allowance
A note receivable is reported in the balance sheet: Multiple Choice As a contra asset. Always as a current asset. As either a current asset or long-term asset depending on the expected collection date. Always as a long-term asset.
as either a current asset or long-term asset depending on the expected collection date.
Warner Corp. sells goods on account for $10,000 on April 2. On April 20, the customer returns $3,000 of the merchandise. The customer has not yet paid for any of the goods. What is the entry Warner will make on April 20 when the goods are returned? Multiple choice question. Debit Sales Returns; credit Accounts Receivable. Debit Sales Returns; credit Allowance for Uncollectible Accounts. Debit Bad Debt Expense; credit Accounts Receivable. Debit Accounts Receivable; credit Allowance for Sales Returns.
debit sales return, credit accounts rec
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 encourage customers to pay quickly reduce the sale price for interest received change prices without publishing a new catalog give quantity discounts to customers
disguise real prices from competitors change prices without publishing a new catalog give quantity discounts to customers
trade discounts represent
reduction in the listed price of a good or service
Two entries are required when a previously written off account is collected. These two entries include: Multiple select question. record the adjustment to sales record bad debt expense reinstate the account receivable record the collection on the account receivable
reinstate the account receivable record the collection on the account receivable
The purpose of recording an allowance for uncollectible accounts is to: Multiple Choice Report accounts receivable at the net amount of cash expected to be collected. Report net sales conservatively. Report accounts receivable for the total amount of sales in the period. Record the sales returns and allowances.
report accounts receivable at the net amount of cash expected to be collected.
A trade discount results in: Multiple Choice A contra revenue account being recorded. A contra asset being recorded. Revenue being recorded for the discounted price. Customers delaying cash payment.
revenue being recorded for the discounted price
On September 1, 2021, a company lends $50,000 to a customer with 10% interest. The note and interest are due in twelve months. The note receivable is recorded for $50,000 on September 1, but no other adjustments are made in 2021. At the end of 2021, which of the following is true? Expenses are understated. Assets are overstated. Revenues are understated. All amounts are accurately stated.
revenues are understated
Which of the following best describes credit sales? Sales to customers on account. Sales with a high risk that the customer will return the product. Cash sales to customers that are new to the company. Sales to customers using credit cards.
sales to customers on account
Which of the following best describes accounts receivable? Multiple Choice The amount of cash not expected to be collected by a company from its customers from the sale of goods or services on account (bad debts). The amount of cash owed by a company to its vendors for purchases of goods or services on account. The amount of cash collected by a company from its customers from the sale of goods or services on account. The amount of cash owed to a company by its customers from the sale of goods or services on account.
the amount of cash owed to a company by its customers from the sale of goods or services on account
Beverage International reports net credit sales for the year of $528,000. The company's accounts receivable balance at the beginning of the year equaled $24,000 and the balance at the end of the year equaled $34,000. What is Beverage International's receivables turnover ratio? (Round your answer to 1 decimal place.)
18.2 528000/(24000+34000/2)=18.2
At December 31, Amy Jo's Appliances had account balances in Accounts Receivable of $370,000 and in Allowance for Uncollectible Accounts of $1,300 (debit) before any adjustments. An analysis of Amy Jo's December 31 accounts receivable suggests that the allowance for uncollectible accounts should be 5% of accounts receivable. Bad debt expense for the year should be:
19800 (370000 x 5%) + 1300
On April 1, 20X1, Nelsen Inc. accepts a $100,000, 8% note. The note receivable and interest are due on March 31, 20X2 (one year later). Assuming Nelson Inc. has a December 31 year-end, on March 31, 20X2, Nelson Inc. will record interest revenue of: Multiple Choice $2,000. $8,000. $6,000. $0.
2,000
On February 1, 2021, Miter Corp. lends cash and accepts a $2,500 note receivable that offers 18% interest and is due in six months. How much interest revenue will Miter Corp. report during 2021? (Do not round intermediate calculations.)
225 2500 x .18 x 6/12
The receivables turnover ratio indicates: The number of times during a year that the average accounts receivables were collected. How efficient the company is at managing sales and inventory. The relationship between sales and cost of goods sold. The relationship between cash sales and credit sales.
the number of times during a year that the average accounts receivables are collected
The direct write-off method is used when Multiple choice question. uncollectible accounts are not anticipated or are immaterial. bad debts are expected to be material in amount. a company expects excessive sales returns. a company elects to use this method as one of several alternatives.
uncollectible accounts are not anticipated or are immaterial
A company's decision to offer discounts for early payment has the potential to increase sales volume, but comes at the cost of slower cash collection.
false
Under the allowance method, companies estimate Blank______ uncollectible amounts and report those estimates in the Blank______ year. Multiple choice question. current; current future; future future; current current; future
future current
A company reported the following amounts at the end of the year: total sales revenue = $550,000; sales discounts = $12,000; sales returns = $44,000; sales allowances = $17,000. What was the company's net revenues for the year? $485,000. $489,000. $477,000. $499,000.
$477,000
On September 1, 2021, Middleton Corp. lends cash and accepts a $1,000 note receivable that offers 12% interest and is due in six months. How much interest revenue will Middleton Corp. report during 2021?
$60
Prime Corp. has an ending balance in the accounts receivable account of $100,000. Prime recorded bad debt expense of $3,000. Prime has an ending balance in the allowance for uncollectible accounts of $7,000. What is the net accounts receivable balance? Multiple choice question. $90,000 $97,000 $93,000 $107,000
93,000
The primary difference between a note receivable and an account receivable is: A note receivable cannot be classified as a current asset. A note receivable is evidenced by a written debt instrument. An account receivable is more likely to be collected. Borrowers have the option of not paying a note receivable.
A note receivable is evidenced by a written debt instrument.
The direct write-off method is not normally an acceptable method for GAAP because it fails to report: Accounts receivable for the net amount of cash expected to be collected. Revenue from the sale of goods or services to customers. The amounts receivable from customers. Cash collected from customers.
Accounts receivable for the net amount of cash expected to be collected.
When an account previously written off is collected in full, the entry to reverse the previous write-off would require which of the following? Multiple select question. Debit Bad Debt Expense. Debit Accounts Receivable. Credit Allowance for Uncollectible Accounts. Credit Accounts Receivable.
Debit Accounts Receivable. Credit Allowance for Uncollectible Accounts.
The formula for the receivables turnover ratio is: Multiple Choice Net credit sales divided by average total assets. Net credit sales divided by average accounts receivable. Average accounts receivable divided by average total assets. Average accounts receivable divided by net credit sales.
Net credit sales divided by average accounts receivable.
Receivables Turnover Ratio
Net sales / avg net accounts receivable
Sales allowance A customer receives a partial refund of the sales price after the customer discovers a flaw in the merchandise. The customer keeps the merchandise.
Sales return A customer returns merchandise purchased during the month and receives a refund of the full sales price.
The amount of cash owed to a company by its customers from the sale of goods or services is referred to as Multiple choice question. uncollectible accounts. accounts receivable. accounts payable. a guarantee.
accounts rec
Writing off a customer's account as uncollectible reduces the balance of
accounts rec
the allowance for uncollectible accounts is a contra account to Multiple choice question. accounts receivable. revenue. bad debt expense. sales allowances.
accoutns rec
With the allowance method, bad debt expense is recorded Multiple choice question. when the customer purchases the goods. when the customer returns the product. when the account becomes uncollectible. at the end of the period when bad debts are estimated.
at the end of the period when bad debts are estimated
One advantage of the allowance method for accounting for uncollectible accounts is that the company reports: Greater total cash collected from customers. Greater total sales to customers. Fewer returns by customers. Bad debt expense in the same period as the credit sale.
bad debit expense in the same period as the credit sale
The cost of estimated accounts receivable that will not be collected is referred to as --- ---- expense.
bad debt
The estimated expense for accounts that may not be collected is referred to as Multiple choice question. bad debt expense. sales discounts. amortization expense. accounts receivable. interest expense.
bad debt expense
The percentage-of-receivables approach to measuring bad debt expense is referred to as Blank______ method. Multiple choice question. an equity a balance sheet an income statement an expense
balance sheet
Compared to other methods of estimating uncollectible accounts, the aging of accounts receivables method tends to Multiple choice question. recognize bad debts earlier. result in the highest net income. be more accurate. result in the lowest net income.
be more accurate
The account "Allowance for Uncollectible Accounts" is classified as a(n): Multiple Choice Contra revenue to credit sales in the income statement. Contra asset to accounts receivable in the balance sheet. Expense in the income statement. Liability account in the balance sheet.
contra asset to accounts rec in the bal sheet
The account "Allowance for Uncollectible Accounts" is classified as Multiple choice question. a contra equity account. an expense in the income statement. a contra asset to accounts receivable. a liability account in the balance sheet.
contra asset to accounts receivable
A sales discount is recorded by the seller as a(n): Multiple Choice Contra asset. Contra revenue. Expense. Liability.
contra revenue
Adrian Corp. sells goods on account for $100,000 on May 1. On May 15, the customer returns $40,000 of the merchandise. The customer has not yet paid for any of the goods. What will Adrian record on May 15? (Select all that apply.) Multiple select question. Credit to Allowance for Sales Returns. Debit to Sales Expense. Credit to Accounts Receivable. Debit to Sales Returns.
credit to accounts rec debit to sales returns
On September 1, Year 1, a company collects a $5,000 six-month, five percent promissory note. The entry to record the collection at maturity date will include a:
credit to interest revenue $125
Joyce determines that a customer account of $20,000 should be written off as uncollectible. The write off of the account will include which of the following entries? Multiple select question. Debit Bad Debt Expense Debit to Allowance for Uncollectible Accounts Credit Allowance for Uncollectible Accounts Credit to Accounts Receivable
debt allowance for uncollectible accounts credit accounts rec
The Accounts Receivable account is reduced when the seller: Multiple choice question. records the allowance for uncollectible accounts determines that a specific customer account will not be collectible adopts the allowance method
determines that a specific customer account will not be collected
Where is a note receivable reported in the balance sheet? Multiple choice question. In either current or noncurrent liabilities, as appropriate. In current assets. In either current or noncurrent assets, as appropriate. In noncurrent liabilities until paid. In noncurrrent assets.
in either current or noncurrent, as appropriate
Under the direct write-off method, uncollectible accounts are recorded: Multiple Choice Never. In the period the account is estimated to be uncollectible. In the period the account is determined actually uncollectible. In the period following the account being actually uncollectible.
in the period the account is determined actually uncollectible
Identify the likely advantage of extending credit to customers. Lower accounts receivable. Fewer expenses. Increased sales. Reduced amounts owed to creditors.
increased sales
net credit sales
net sales - cash sales
Receivables not expected to be collected should Multiple choice question. not be counted in assets of the company. always be counted in assets of the company. initially be included as assets and then be written off when the customer does not pay.
not be counted in assets
Receivables not expected to be collected should Multiple choice question. always be counted in assets of the company. not be counted in assets of the company. initially be included as assets and then be written off when the customer does not pay.
not be counted in assets of the company
when customers purchase goods on account, Spitz Manufacturing offers them a 2% reduction in the amount owed if they pay within 10 days. This is an example of a: Multiple Choice Sales discount. Bad debt. Sales allowance. Sales return.
sales discount
Accounts receivable are typically classified as current assets because Multiple choice question. they are a formal agreement to pay within a specific period of time. they accrue interest at a specified interest rate. they are matched with accounts payable for the period. they will be converted to cash within 1 year.
they will be converted to cash within a year
At the end of Year 1, Fulton Corporation estimates uncollectible accounts to be $10,000. Actual bad debts during Year 2 totaled $12,000. This indicates that management's estimate of uncollectible accounts in Year 1 was:
too low
The allowance method requires managers to estimate future uncollectible accounts and to record that estimate in the current year.
true
A debit balance in the Allowance for Uncollectible Accounts before year-end adjustment indicates that the company wrote off more bad debts in the current year than it had estimated.
true
Credit sales involve benefits and costs. A benefit of selling on credit is that the seller makes it more convenient for customers to purchase goods and services. A cost of selling on credit is that there is a delay in collecting cash from customers.
true
The direct write-off method is used for tax purposes but is generally not permitted for financial reporting.
true
Writing off actual bad debts and reestablishing those previous write-offs when it appears that customers will pay has no effect on net accounts receivable.
true
The allowance method estimates Multiple choice question. uncollectible accounts. future sales. trade discounts. sales discounts.
uncollectible accounts
LOOK AT 20.
14?
Use the information below to calculate net revenues. Service Revenue$100,000 Sales Discounts$2,000 Accounts Receivable$15,000 Sales Allowances$7,000 Cash$18,000 Multiple Choice $91,000. $68,000. $98,000. $85,000.
91,000
A trade discount is Multiple choice question. an increase in the account receivable. a rebate from the manufacturer. a percentage reduction of the amount due for early payment. a reduction from list price.
a reduction form list price
Using a balance sheet approach to estimate bad debts involves calculating the desired ending balance in which account? Multiple Choice Allowance for uncollectible accounts. Credit sales. Accounts receivable. Bad debt expense.
allowance for uncollectible accounts
Amend Inc. debited Accounts Receivable and credited Allowance for Uncollectible Accounts to reestablish an account previously written off. Amend Inc. should also debit Blank______ and credit Blank______. Multiple choice question. Accounts Receivable; Cash Cash; Accounts Receivable Allowance for Uncollectible Accounts; Cash Cash; Allowance for Uncollectible Accounts
cash, accounts rec
When the allowance method is used, the write-off of an uncollectible account: Multiple choice question. has no effect on net income decreases net income increases net income
no effect on net income
Total revenues less discounts, returns, and allowances are referred to as
net rev
Gershwin Wallcovering Inc. shipped the wrong shade of paint to a customer. The customer agreed to keep the paint upon being offered a 15% price reduction. The price reduction is an example of a: Sales allowance. Sales revenue. Sales return. Sales discount.
sales allowance
Which of the following refers to the seller reducing the customer's balance owed because of some deficiency in the company's product or service? Multiple Choice Sales Allowance. Allowance for Uncollectible Accounts. Sales Discount. Trade Discount.
sales allowance
Net revenues is calculated as total revenues minus which of the following items? Multiple select question. Accounts receivable Sales discounts Sales returns Allowance for uncollectible accounts Sales allowances
sales discount sales return sales allowance
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. sales on account. deferred sales. credit sales.
sales on account credit sales
A cash discount representing a reduction in the amount to be paid by a credit customer if the customer pays within a specified period of time is also referred to as a
sales or cash discount
Account(s) with a normal credit balance include: Accounts Receivable Allowance for Uncollectible Accounts Bad Debt Expense Cash Sales Revenue
allowance for uncollectible Accounts sales revenue
Compared to other methods of estimating uncollectible accounts, the aging of accounts receivables method tends to: Recognize bad debts earlier. Result in the highest net income. Be more accurate. Result in the lowest net income.
be more accurate
Allowance for Uncollectible Accounts has a credit balance because it is a(n) Blank______ account. Multiple choice question. asset contra-asset expense contra-revenue liability
contra asset
The account "Allowance for Uncollectible Accounts" is classified as a(n): Multiple Choice Contra asset to accounts receivable in the balance sheet. Contra revenue to credit sales in the income statement. Expense in the income statement. Liability account in the balance sheet.
contra asset to accounts receivable in the balance sheet
Sales Returns and Sales Allowances are contraBlank --- ---accounts and require a debit entry to increase the account.
contra revenue
When an account previously written off is collected in full, the entry to reverse the previous write-off would require which of the following? Multiple select question. Credit Allowance for Uncollectible Accounts. Debit Bad Debt Expense. Debit Accounts Receivable. Credit Accounts Receivable.
debit accounts rec credit allowance for uncollectible accounts
Shannon determines that a customer account of $10,000 should be written off as uncollectible. The write off of the account will include Multiple choice question. debit Accounts Receivable. debit Allowance for Uncollectible Accounts. debit Bad Debt Expense. credit Sales Returns and Allowances.
debit allowance for uncollectible accounts
Identify the primary disadvantage of extending credit to customers. Multiple Choice Reduced operating efficiency. Lower revenues. Delay or failure to collect cash. Lower profitability.
delay or failure to collect cash
Under the direct write-off method, what adjustment is made at the end of the year to account for possible future bad debts? Multiple Choice Debit Allowance for Uncollectible Accounts. Credit Accounts Receivable. Debit Bad Debt Expense. No adjustment is made.
no adjustment is made
The direct write-off method is used when: A company elects to use this method as one of several alternatives. Uncollectible accounts are not anticipated or are immaterial. A company has greater cash outflows than cash inflows. A company expects excessive sales returns.
uncollectible accounts are not anticipated or are immaterial
When the direct write-off method is used, an entry for bad debt expense is required Multiple choice question. at the end of the year. when each sale is made. when the account receivable is determined to be uncollectible. only when bad debts are recorded on the tax return.
when the account receivable is determined to be uncollectible.
Which of the following is recorded by a credit to Accounts Receivable? Multiple Choice Estimating the annual allowance for uncollectible accounts. Estimating annual sales returns. Sale of inventory on account. Writing off of bad debts.
writing off of bad debts
Average Collection Period Ratio
365/receivables turnover ratio
On March 17, Jackal Lumber sold building materials to Fredo Limited for $15,000 with terms of 3/10, net 20. What amount did Jackal record as revenue on March 25 when Fredo paid for the building materials? Multiple Choice $15,000. $0. $15,450. $14,550.
0
An informal credit arrangement with a customer for payment to be received after the sale is classified as a(n) Multiple choice question. nontrade receivable. account receivable. note payable. prepaid receivable.
account rec
The amount of cash owed to a company by its customers from the sale of goods or services on account is commonly referred to as: Multiple Choice Cash. Accounts receivable. Revenue. Accounts payable.
account rec
The direct write-off method is generally not permitted for financial reporting purposes because: Multiple Choice It is too difficult to accurately estimate future bad debts. Accounts receivable are not reported for the net amount of cash expected to be collected. This method is primarily used for tax purposes. Compared to the allowance method, it would allow greater flexibility to managers in manipulating reported net income.
accounts receivable are not reported for the net amount of cash expected to be collected
The approach that considers the age of various accounts receivables to estimate uncollectible accounts is referred to as the ---- method of accounts rec
aging
The method of estimating uncollectible accounts based on the length of time the amount is owed by the customer is referred to as the: Realization method. Activity method. Aging method. Direct write-off method.
aging method
Which of the following items are classified as receivables? All of the other answers are classified as receivables. Amounts loaned and expected to be collected. Amounts owed by customers. Tax refund claims.
all
The allowance method for uncollectible accounts Multiple Choice Allows for the possibility that some accounts will not be collected. All of the answer choices are correct. Reports net accounts receivable for the amount of cash expected to be collected. Is required by Generally Accepted Accounting Principles.
all of the answers are correct
To record an estimate for future bad debts at the end of the period, an adjustment would be made with a credit to Multiple choice question. bad debt expense. sales returns and allowances. allowance for uncollectible accounts. accounts receivable.
allowance for uncollectible accounts
Accounts receivable are normally reported at the: Multiple Choice Current value less expected collection costs. Amount expected to be collected. Current value plus accrued interest. Present value of future cash receipts.
amount expected to be collected
Accounts receivable are normally reported at the: Multiple Choice Current value plus accrued interest. Present value of future cash receipts. Current value less expected collection costs. Amount expected to be collected.
amount expected to be collected
Sales Returns is an example of a(n) ____________ account, which is used to keep a record of reductions from revenue due to sales returns separate from total revenue itself.
contra revenue
The Sales Returns and Sales Allowances accounts are classified as Multiple choice question. contra asset accounts. contra liability accounts. contra revenue accounts. contra equity accounts.
contra revenue accounts
The account "Allowance for Uncollectible Accounts" normally has a
credit
When a business provides services to a customer, and the customer promises to pay later, this is referred to as Multiple choice question. credit sales. operating sales. cash sales. current sale.
credit sale
Planters Corp. wrote off a customer's uncollectible account in April. In the following month, Planters collected from the customer in full. The entry to reinstate the account would require a Multiple choice question. debit to Sales Returns and Allowances. credit to Allowance for Uncollectible Accounts. debit to Bad Debt Expense. credit to Accounts Receivable.
credit to allowance for uncollectible accounts
The journal entry to record bad debt expense includes: (Select all that apply.) Multiple select question. credit to bad debt expense debit to bad debt expense credit to allowance for uncollectible accounts debit to allowance for uncollectible accounts
debit bad debt expense credit to allowance for uncollectible accounts
Ophelia Inc. just learned that Patton Inc., one of its customers with an outstanding accounts receivable balance, filed for bankruptcy. Assuming that the company utilizes the allowance method, Ophelia should record a(n): Multiple choice question. decrease in Accounts Receivable increase in Accounts Receivable increase in Sales Revenue decrease in Sales Revenue increase in Allowance for Doubtful Accounts
decrease accounts rec
A formal credit arrangement between a creditor and debtor is called a(n) Multiple choice question. note receivable. account receivable. trade receivable. interest receivable.
note rec
A formal, signed credit agreement between a lender and a borrower is called a(n) Blank______ by the lender. Multiple choice question. account payable. note payable. account receivable. note receivable.
note rec
