Chapters 8

A visually engaging graphic showing financial documents, accounts receivable accounts, and graphs, illustrating the concept of accounting and finance.

Understanding Accounts Receivable Quiz

Test your knowledge on accounts receivable and related concepts with this comprehensive quiz designed for students and professionals in accounting. Dive into topics including bad debts, allowances, and the collection process, and sharpen your skills!

18 questions covering essential accounting principles
Multiple choice and calculation-based questions
Immediate feedback on your answers

18 Questions4 MinutesCreated by CalculatingNinja407

Under the allowance method, bad debts expense is debited when an account is deemed uncollectible and must be written off

True

False

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles

Will increase income in the period it is collected

Will decrease income in the period it is collected

Requires a correcting entry for the period in which the account was written off

Does not affect income in the period it is collected

The percentage of sales basis of estimating expected uncollectibles

Emphasizes the matching of expenses with revenues

Emphasizes balance sheet relationships

Emphasizes cash realizable value

Is not generally accepted as a basis for estimating bad debts

An aging of a company's accounts receivable indicates that $9,000 are estimated to be uncollectible. If allowance for doubtful accounts has a $1,000 credit balance, the adjustments to record bad debts for the period will require a

Debit to bad debts expense for $9,000

Debit to allowance for doubtful accounts for $7,900

Debit to bad debts expense for $7,900

Credit to allowance for doubtful accounts for $9,000

A debit balance in the allowance for doubtful accounts

Is the normal balance for that account

Indicates that actual bad debts write-offs have exceeded previous provisions for bad debts

Indicates that actual bad debts write-offs have been less than what was estimated

Cannot occur if the percentage of sales method of estimating bad debts is used

Bad debts expense is considered

An avoidable cost in doing business on acredit basis

An internal control weakness

A necessary risk of doing business on a credit basis

Avoidable unless there is a recession

compute the maturity value for each of the following notes receivable

1. a $5,000, 6%,, 3-month note dated july 20.

maturity value $_________

2. a 12,000, 9%, 150-day note dated august 5.

maturity value $_________

compute the maturity value for each of the following notes receivable

1. a $5,000, 6%,, 3-month note dated july 20.

maturity value $_________

2. a 12,000, 9%, 150-day note dated august 5.

maturity value $_________

Three accounting issues associated with accounts receivables are

Depreciation, returns and valuing

Depreciation, valuing and collecting

Recognizing, valuing and disposing

Accrual, bad debts, and disposing

Under the allowance method, writing off an uncollectible account

Affects only balance sheet accounts

Affects both balance sheet and income statement accoutnts

Affects only income statement accounts

Is not acceptable practice

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

Cash realizable value

Cash-good value

Gross cash value

Cash-equivalent value

If a company fails to record estimated bad debts expense,

Cash realizable value is understated

Expenses are understated

Revenues are understated

Receivables are understated

The existing balance in allowance for doubtful accounts is considered in computing bad debts expense in the

Direct write-off methos

Percentage of receivables basis

Percentage of sales basis

Percentage of receivables and percentage of sales basis

When the allowance method is used to account for uncollectible accounts, bad debts expense is debited when

A sale is made

An account becomes bad and is wrriten off

Management estimates the amount of uncollectibles

A customer's account becomes past-due

When an account becomes uncollectible and must be written off,

Allowance for doubtful accounts should be credited

Accounts receivable should be credited

Bad debts expense should be credited

Sales should be debited

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