Chapter 8 Financial Accounting

if the receivables turnover ration decreased during the year a. the days to collect also decreased b. Receivables collections slowed down c. Sales revenues increased at a faster rate than accounts Receivable increased d. None of the Above

b. Receivables collections slowed down

For many years, carefree Company has estimated bad debt Expense using the aging of accounts receivable method. Assuming carefree has no write-offs or recoveries, its estimate of uncollectible receivables resulting from the aging analysis equals a. Bad debt Expense for the current period b. The ending balance in the allowance for doubtful accounts for the period c. The change in the Allowance for Doubtful Accounts for the period d. both (a) and (c)

b. The ending balance in the allowance for doubtful accounts for the period

When using the allowance the method, as Bad Debt Expense is recorded, a. Total assets remain the same and stockholders' equity remains the same b. Total assets decrease and stockholders' equity decrease c. Total assets increase and stockholders' equity decreases d. Total liabilities increase and stockholders' equity decreases

b. Total assets decrease and stockholders' equity decrease

If the Allowance for doubtful accounts opened with 10,000 credit balance, had write-offs of 5,000 ( with no recoveries) during the period, and had a desired ending balance of 20,000 based on aging analysis, what was the amount of Bad Debt Expense a. 5,000 b. 10,000 c. 15,000 d. 20,000

c. 15,000

If a 10 percent not receivable for 10,000 is created on january 1, 2012, and it has a maturity date of December 31, 2016 a. No interest revenue will be recorded in 2012 b. The note receivable will be classified c. Interest revenue of 1,000 will be recorded in 2012 d. None of the above

c. Interest revenue of 1,000 will be recorded in 2012

Which of the following best describes the proper presentation of accounts receivable in the financial statements? a. Accounts Receivable plus the Allowance for doubtful accounts in the asset section of the balance sheet b. Accounts receivable in the asset section of the balance sheet and the allowance for doubtful accounts in the expense section of the income statement c. Accounts receivable less Bad debt expense in the asset section of the balance sheet d. Accounts receivable less the allowance for doubtful accounts in the asset section of the balance sheet

d. Accounts receivable less the allowance for doubtful accounts in the asset section of the balance sheet

In 2010, Coca-Cola Enterprises had a receivables turnover ratio of 7.9. Which of the following actions could Coca- Cola take to cause the ratio to increase? a. Pursue collections more aggressively b. Increase the percentages used to estimate bad debts c. Factor its receivables d. All of the above

d. All of the above

All else equal, if VFC incurs a 3 percent fee to factor 10,000 of its accounts receivable, its Net Income will a. increase by 10,000 b. increase by 9,700 c. increase by 300 d. Decrease by 300

d. Decrease by 300

When an account receivable is "recovered" a. Total assets increase b. Total assets decrease c. Stockholder's equity increases d. None of the above

d. None of the above

When a company using the allowance method writes off a specific costumer's account receivable from the accounting system, now many of the following are true? - Total stockholder's equity remains the same - Total assets remain the same - Total expenses remain the same a. none b. one c. two d. three

d. three