Receivables Flashcards
Trade receivables are current assets if they are:
a. Collectible within 1 year
b. Collectible within the company’s normal operating cycle
c. Collectible within 1 year or company’s normal operating cycle, whichever is shorter
d. Collectible within 1 year or company’s normal operating cycle, whichever is longer
d.
Non-trade receivables are classified as current assets if they are:
a. Collectible within 1 year
b. Collectible within the company’s normal operating cycle
c. Collectible within 1 year or company’s normal operating cycle, whichever is shorter
d. Collectible within 1 year or company’s normal operating cycle, whichever is longer
a.
Which of the following is a non-trade, current receivable?
a. 10%, 9-month notes receivable from customer arising from sale of goods
b. 12% 3-year loans receivable
c. Advances to suppliers
d. Advances from customers
c.
Journal entry for payment to supplier amounting to P120,000, assuming company has P100,000 balance with supplier:
Dr. Accounts payable 120,000
Cr. Cash 120,000
Since we have a debit balance for a liability (which shouldn’t, but may, occur), the journal entry to eliminate the excess P20,000 is:
Dr. Advances to suppliers 20,000
Cr. Accounts payable 20,000
Advances to suppliers is a receivable (asset) account, representing the fact that the supplier has an obligation to deliver goods to customer. The journal entry for receipt of goods would be:
Dr. Merchandise inventory (or purchases) 20,000
Cr. Advances to supplier 20,000
Choice a is a current TRADE asset.
Choice b is a NON-CURRENT non-trade asset
Choice d is a liability account
An example of a trade receivable is:
a. Amounts due from customer
b. Subscription receivable, collectible for more than 1 year
c. Amounts due to supplier
d. Amounts representing overpayment from customer
a.
When a customer credit balance exists, it should be treated as:
a. Current asset
b. Non-current asset
c. Current liability
d. Non-current liability
e. Contra-equity
c.
What is the treatment of subscription receivable if such amount is not collectible within 1 year?
a. Current asset
b. Non-current asset
c. Equity
d. Contra-equity
d.
On July 1, K Co. rented a portion of its building space to L Co. for 9 months, receiving a total amount of P180,000. On December 31, the amount of rent receivable presented under current assets would be:
a. P120,000
b. P60,000
c. P180,000
d. P0
d.
This is not a receivable item, but more of deferred income (liability).
Initial entry on Jul. 1:
Dr. Cash P180,000
Cr. Unearned rent income P180,000
Adj. entry on Dec. 31:
Dr. Unearned rent income P120,000
Cr. Rent income P120,000
Accrued income such as interest income are recorded as:
a. Current trade receivables
b. Current nontrade receivables
c. Noncurrent trade receivables
d. Noncurrent nontrade receivables
b.
How are receivables initially measured, generally?
a. Fair value
b. Fair value PLUS directly-attributable transaction costs
c. Fair value LESS directly-attributable transaction costs
d. Amortized cost
b.
How are receivables subsequently measured?
a. Fair value
b. Fair value PLUS directly-attributable transaction costs
c. Fair value LESS directly-attributable transaction costs
d. Amortized cost, using effective interest method
d.
How should accounts receivable be reported?
a. Fair value LESS costs to sell
b. Present value
c. Realizable value
d. Fair value
c.
Choose the TRUE statement.
I. Theoretically speaking, the gross method is the most correct of all methods of recording cash discounts
II. The gross method is the most commonly used method of accounting cash discounts
III. Under the net method, the account “Sales discount” is used when customer pays within discount period.
a. I & II
b. I & III
c. II & III
d. II only
d.
The account “Sales discount” should be reported in the income statement as:
a. Deduction from sales
b. Deduction from Cost of Sales
c. Addition from Cost of Sales
d. Ignored
a.
Under GAAP, this method is permitted when accounting for doubtful accounts.
a. Direct write-off
b. Allowable method
c. Allowance method
d. Direct write-down method
c.
Assume that X Co. uses the allowance method in accounting for doubtful accounts. When a previously written-off account from last year is collected this year, accounts receivable will:
a. Decrease
b. Increase
c. Neither a nor b
d. Be recorded as additional income
c.
It will have NO effect. Assume that previous write-off is P10,000.
To record write-off:
Dr. Allowance for doubtful accounts P10,000
Cr. Accounts receivable P10,000
To reinstate the previously written off account:
Dr. Accounts receivable P10,000
Cr. Allowance for doubtful accounts P10,000
To record the collection:
Dr. Cash P10,000
Cr. Accounts receivable P10,000
