Chapters 8
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
Other receivables include nontrade receivables such as loans to company officers
True
False
Accounts receivable are the result of cash and credit sales
True
False
Allowance for doubtful accounts is a contra asset account
True
False
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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