Quiz 8 Flashcards

1
Q

accounts receivable arise from credit sales to customers by both retailers and wholesalers

A

true

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2
Q

as long as a company accurately records credit sales informations, it is not necessary to have accounts for specific customers

A

false

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3
Q

if a customer owes interest on a bill accounts receivable is debited and interest expense is credites

A

false

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4
Q

TechCom customer RDA electronics paid off an $8,300 balance on its account receivable techCom should record the transaction as a debit to accounts receivable RDA electronics and a credit to cash

A

false

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5
Q

the aging of accounts receivable examines each account receivable to estimate the amount that is uncollectible

A

true

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6
Q

the percentage of sales approach for estimating bad debts is based on the idea that a percent of a companies credit sales for the period are uncollectible

A

true

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7
Q

TechCom has $40,000 in outstanding accounts receivable. Past experience suggests that 5% of outstanding receivables are uncollectible. The current balance in the allowance for doubtful accounts is $2,500 debit. The required adjusting journal entry includes a debit to bad debt expense for $4,500.

A

true

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8
Q

TechCom has sales of $350,000 and estimates that 0.5% of its sales are uncollectible. The amount of bad debt expense to be recorded is $17,500.

A

false

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9
Q

The direct write-off method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible

A

true

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10
Q

the direct write off method satisfies generally accepted accounting priciples

A

false

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11
Q

the direct write off methods does not use the allowance for doubtful account

A

true

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12
Q

the allowance method complies with the generally accepted accounting principle of matching

A

true

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13
Q

a promissory note is a written promise to pay a specified amount of money either on demand or at a definite future date

A

true

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14
Q

the formula for computing interest on a note receivable is principal multiplied by interest rate multiplied by time

A

true

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15
Q

Augusto Diaz borrowed $1,000 and signed a 6-month promissory note at 11% interest. The total amount of interest is $110.00.

A

false

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16
Q

Phuong Vo borrowed $5,000 and signed a 3-month promissory note at 10%. The total interest on the note is $125.

A

true

17
Q

TechCom received a $1,000, 90-day, 10% note receivable from Danny Outlaw. The journal entry to record the note includes a debit to notes receivable

A

true

18
Q

a dishonoured note receivable is reclassified as an account receivable

A

true

19
Q

a high accounts receivable turnover rate in comparison with that of competitors suggest that the firm should tighten its credit policy

A

false

20
Q

a promissory note from a customer……

A

is a note receivable

21
Q

the maturity date of a note receivable is….

A

the day the note is due to be paid

22
Q

the cash to be received at maturity on a $10,000, 8% 90-day note receivable is….

A

10,197.26

23
Q

The Liccorish Pizza bought $5,000 worth of merchandise from TechCom and signed a 90-day, 10% promissory note for the $5,000. TechCom’s journal entry to record the transaction is

A

notes receivable 5,000 debited sales credited 5,000

24
Q

accounts receivable turnover measures

A

how often a company converts its average accounts receivable balance into cash during the period

25
Q

the use of the bad debt and allowance accounts is required under which accounting concept?

A

the matching principle