ACCT 8

Temple Company accepts a note receivable from a customer for $2,400. Temple later experiences cash flow problems. Through which process does it sell the note? A endorsement B designation C reconciliation D realization

A. endorsement

Notes receivable are written promises that are considered A formal instruments of credit. B cash receipts. C informal agreements. D nonbinding instruments of credit.

A. formal instruments of credit.

Which of the following should be reported as separate items on the balance sheet? A trade receivables and other receivables B notes receivable and trade receivables C accounts receivable and trade receivables D other receivables and interest receivable

A. trade receivables and other receivables

On April 3, 2022, Manolo Company sold merchandise on account to Collins Stores for $3,850, terms 2/7, n/30. If Collins returns merchandise with a sale price of $250 on April 5, 2022, what amount will Manolo record in their Cash account if Collins pays in full on April 9, 2022? A $3,850 B $3,528 C $3,600 D $3,773

B. $3,528

David works in the accounting department of Porter Manufacturing, where he is reviewing various items that have been listed as "other receivables." Of the following items David notices on the list, which is properly placed in this category? A a $7,500 sale of services to a private individual, with repayment due within 30 days B an $8,000 loan to Porter's CFO, with repayment due within 45 days C an $11,000 sale of goods to a corporate client, with repayment plus 3% interest due within 90 days D a $10,000 sale of goods to a corporate client, with repayment due within 45 days

B. an $8,000 loan to Porter's CFO, with repayment due within 45 days

Which of the following will reduce Accounts Receivable? A advances to employees B sales returns C adjusting entry for interest owed D sale of goods

B. sales returns

Velocity Company reports an average collection period of 43.8 days. Beginning and ending accounts receivable are $61,225 and $51,025, respectively. What were Velocity's net credit sales? A $1,018,750 B $425,208 C $467,708 D $510,208

C. $467,708

ssuming a 36% annual rate of interest on a company-issued credit card, which of the following best explains what is meant by a journal entry that reads A The customer paid one month's interest on a purchase of $2,000. B The customer paid only 3% on a $2,000 purchase. C The customer owes one month's interest on a purchase of $2,000. D The customer paid off all but 3% of a $2,000 purchase.

C. The customer owes one month's interest on a purchase of $2,000.

Which of the following would be classified as "other receivables"? A trade receivables B accounts receivable C advances to employees D written promise to pay amount owed

C. advances to employees

What does a company do when it receives an interest-bearing note receivable? A debits Notes Receivable for the maturity value of the note B credits Notes Receivable for the face value of the note C debits Notes Receivable for the face value of the note

C. debits Notes Receivable for the face value of the note

Because the ________ method violates the ________, it is unacceptable for financial reporting. A allowance; matching principle B direct write-off; going-concern principle C direct write-off; matching principle D allowance; relevance criteria

C. direct write-off; matching principle

Interest receivable, income taxes refundable, and advances to employees are examples of A trade receivables. B notes receivable. C other receivables. D accounts receivable.

C. other receivables.

The financial statements of R & P Imports report net sales of $600,000 and accounts receivable of $60,000 and $100,000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for R & P Imports? A 8.3 times B 12 times C 10.5 times D 7.5 times

D. 7.5 times

Which of the following statements about accounts receivable is true? A Accounts receivable represent purchases that customers have paid for in cash and purchases on credit. B Accounts receivable represent purchases that customers have paid for in cash. C Accounts receivable include nontrade receivables such as interest receivables. D Accounts receivable represent purchases by customers on credit.

D. Accounts receivable represent purchases by customers on credit.

Under the allowance method, when a specific account is written off, total assets will A be written off. B increase. C decrease. D be unchanged.

D. BE UNCHANGED

Which of the following statements is true about accounting for uncollectible accounts under the allowance method of accounting? A The cash realizable value of accounts receivable is greater before an account is written off than after it is written off. B Bad Debt Expense is debited when a specific account is written off as doubtful. C Allowance for Doubtful Accounts is closed each year to Income Summary. D The cash realizable value of accounts receivable in the balance sheet is the same before and after an account is written off.

D. The cash realizable value of accounts receivable in the balance sheet is the same before and after an account is written off.

What is another name for trade receivables? A income taxes refundable B advances to employees C other receivables D accounts receivable

D. accounts receivable

Why are national credit card sales considered cash sales even though cash is not received at the time the transaction is carried out? A because there is no other way to differentiate national and store-issued credit sales B because the issuer absorbs any losses associated with a failure to collect C because the service fee must be recorded as a cash loss D because the credit card issuer guarantees payment

D. because the credit card issuer guarantees payment

Retailers that issue their own credit cards ________ if ________ is not made within a certain time after the sale is made. A request the return of goods; a partial payment B do not charge interest; a partial payment C always turn over receivables to a collection agency; payment in full D charge interest; payment in full

D. charge interest; payment in full

A ________ usually involves the A loan to a company officer; recognition of a liability. B account receivable; collection of interest. C account receivable; documentation of a formal instrument. D note receivable; collection of interest.

D. note receivable; collection of interest.

When using the direct write-off method, a company_________an allowance for its estimated uncollectible receivables.

DOES NOT USE

A promissory note holds a_________legal claim than an account receivable.

STRONGER

A________ will ________ the amount of cash eventually received when a sale is made on account.

Sales discount, decrease

Notes or accounts receivable that result from sales are called

TRADE RECEIVABLES

Which receivable listed below is a nontrade receivable? A advances to employees B prepaid expenses C accounts receivable D notes receivable

A. advances to employees

How much interest will a 90-day note receivable of $1,800 with an interest rate of 11% earn? A $99.00 B $198.00 C $48.82 D $49.50

D. 49.5

If the amount of bad debt expense is understated at year end, net Accounts Receivable will be __________ .

OVERSTATED

Net Accounts Receivable will be understated if the amount of bad debt expense is _______ at year end.

OVERSTATED