Quiz 8

Question 1

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

Answer 1

true

Question 2

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

Answer 2

false

Question 3

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

Answer 3

false

Question 4

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

Answer 4

false

Question 5

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

Answer 5

true

Question 6

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

Answer 6

true

Question 7

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.

Answer 7

true

Question 8

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.

Answer 8

false

Question 9

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

Answer 9

true

Question 10

the direct write off method satisfies generally accepted accounting priciples

Answer 10

false

Question 11

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

Answer 11

true

Question 12

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

Answer 12

true

Question 13

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

Answer 13

true

Question 14

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

Answer 14

true

Question 15

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

Answer 15

false

Question 16

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

Answer 16

true

Question 17

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

Answer 17

true

Question 18

a dishonoured note receivable is reclassified as an account receivable

Answer 18

true

Question 19

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

Answer 19

false

Question 20

a promissory note from a customer……

Answer 20

is a note receivable

Question 21

the maturity date of a note receivable is….

Answer 21

the day the note is due to be paid

Question 22

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

Answer 22

10,197.26

Question 23

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

Answer 23

notes receivable 5,000 debited sales credited 5,000

Question 24

accounts receivable turnover measures

Answer 24

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

Question 25

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

Answer 25

the matching principle