Question 1

Explain how the materiality principle can be used to justify the direct write-off method.

Accepted Answer

Materiality allows other principles to b...

Question 2

Accounts receivable turnover is calculated by:

Accepted Answer

A)  Dividing net income by average accounts receivable.
B)  Dividing average accounts receivable by net sales and multiplying by 365.
C)  Dividing net sales by average accounts receivable.
D)  Dividing net sales by average accounts receivable and multiplying by 365.
E)  Dividing average accounts receivable by net sales.

Question 3

Describe accounts receivable and how they are recorded into the accounting system.

Accepted Answer

Accounts receivable arise from sales to ...

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

A payee of a note usually honours a note and pays it in full.

Accepted Answer

A) True 
 B)False

Question 6

Assume that at March 14, 2019, it was determined that a balance of $7,000needed to be written off as uncollectible. Provide the journal entry for the write-off.

Accepted Answer

The answer of Assume that at March 14, 2019, it...

Question 7

Accounts receivable turnover shows how often a company converts its average accounts receivable balance into cash during the period.

Accepted Answer

A) True 
 B)False

Question 8

Interest on $8,400 at 7% for 60 days is:

Accepted Answer

A)  $65.25.
B)  $96.66.
C)  $52.65.
D)  $36.45
E)  $41.42

Question 9

What is the purpose of the days' sales uncollected ratio?

Accepted Answer

The days' sales uncollected ratio is a l...

Question 10

Selected financial statement data for California Ltd, at its December 31 year end is below:  California's credit terms are net 30 days. A 2% discount can be taken if the bill is paid within 10 days from the invoice date.In 2018, California collects its accounts receivable:

Accepted Answer

A)  Within the 20 days, as required by its credit terms.
B)  Within the 30 days, as required by its credit terms.
C)  After the 30 day terms passed.
D)  Within the 10 day discount period.
E)  More information is needed to answer this question.

Question 11

Electron borrowed $75,000 from TechCom by signing a promissory note and pledging$85,000 in accounts receivable as security. TechCom's entry to record the transaction should include a:

Accepted Answer

A)  Credit to Notes Receivable for $75,000.
B)  Credit to Sales for $75,000.
C)  Debit Notes Payable for $75,000.
D)  Debit to Accounts Receivable for $75,000.
E)  Debit to Notes Receivable for $75,000.

Question 12

Assuming that Peter Corporation has a December 31 year-end, prepare the adjusting entry at December 31, 2018 for doubtful accounts.

Accepted Answer

.02 × $200...

Question 13

Accounts receivable turnover is calculated by dividing net sales by average accounts receivable.

Accepted Answer

A) True 
 B)False

Question 14

The days' sales uncollected ratio:

Accepted Answer

A)  Is calculated by dividing accounts receivable by sales.
B)  Is used to evaluate the liquidity of receivables.
C)  Measures a company's debt to income.
D)  Measures a company's ability to pay its bills on time.
E)  Is calculated by dividing sales by accounts receivable.

Question 15

On December 31 of the current year, Kellan CompanyAbout 1.5% of credit sales.(b)About 5% of accounts receivable.

Accepted Answer

The answer of On December 31 of the current year,...

Question 16

A company must have less than 30 days' sales uncollected in order to be adequately liquid.

Accepted Answer

A) True 
 B)False

Question 17

The days' sales uncollected ratio is calculated by dividing accounts receivable by net sales and multiplying the answer by 365.

Accepted Answer

A) True 
 B)False

Question 18

If a 60-day note receivable is dated September 22, what is the due date of the note?

Accepted Answer

The answer of If a 60-day note receivable is dated...

Question 19

Dell had net sales of $8,739 million and average accounts receivable of $864 million.Its accounts receivable turnover was:

Accepted Answer

A)  9.9.
B)  10.1.
C)  12.8.
D)  36.1.
E)  9.1.

Question 20

Compaq's accounts receivable turnover rate was 5.7 for this year and 5.4 for last year.Dell's turnover rate was 6.8 for this year and 7 for last year. This means that:

Accepted Answer

A)  Dell has the better turnover rate for both years.
B)  Dell's turnover rate is improving.
C)  Compaq has the better turnover rate for both years.
D)  Compaq's turnover rate is improving.
E)  Dell has the better turnover rate for both years and Compaq's turnover rate is improving.

Exam 8: Receivables

Dell had net sales of $8,739 million and average accounts receivable of $864 million.Its accounts receivable turnover was:

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A company must have less than 30 days' sales uncollected in order to be adequately liquid.

Correct AnswerverifiedShow Answer

On December 31 of the current year, Kellan CompanyAbout 1.5% of credit sales.(b)About 5% of accounts receivable.

Correct AnswerverifiedShow Answer

Electron borrowed $75,000 from TechCom by signing a promissory note and pledging$85,000 in accounts receivable as security. TechCom's entry to record the transaction should include a:

Correct AnswerverifiedShow Answer

The days' sales uncollected ratio is calculated by dividing accounts receivable by net sales and multiplying the answer by 365.

Correct AnswerverifiedShow Answer

A payee of a note usually honours a note and pays it in full.

Correct AnswerverifiedShow Answer

What is the purpose of the days' sales uncollected ratio?

Correct AnswerverifiedThe days' sales uncollected ratio is a l...View AnswerShow Answer

The days' sales uncollected ratio:

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Describe accounts receivable and how they are recorded into the accounting system.

Correct AnswerverifiedAccounts receivable arise from sales to ...View AnswerShow Answer

Accounts receivable turnover shows how often a company converts its average accounts receivable balance into cash during the period.

Correct AnswerverifiedShow Answer

Accounts receivable turnover is calculated by:

Correct AnswerverifiedShow Answer

Interest on $8,400 at 7% for 60 days is:

Correct AnswerverifiedShow Answer

Assume that at March 14, 2019, it was determined that a balance of $7,000needed to be written off as uncollectible. Provide the journal entry for the write-off.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Selected financial statement data for California Ltd, at its December 31 year end is below: California's credit terms are net 30 days. A 2% discount can be taken if the bill is paid within 10 days from the invoice date.In 2018, California collects its accounts receivable:

Correct AnswerverifiedShow Answer

Accounts receivable turnover is calculated by dividing net sales by average accounts receivable.

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Compaq's accounts receivable turnover rate was 5.7 for this year and 5.4 for last year.Dell's turnover rate was 6.8 for this year and 7 for last year. This means that:

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If a 60-day note receivable is dated September 22, what is the due date of the note?

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Explain how the materiality principle can be used to justify the direct write-off method.

Correct AnswerverifiedMateriality allows other principles to b...View AnswerShow Answer

Assuming that Peter Corporation has a December 31 year-end, prepare the adjusting entry at December 31, 2018 for doubtful accounts.

Correct Answerverified.02 × $200...View AnswerShow Answer

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The days' sales uncollected ratio is a l...
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Accounts receivable arise from sales to ...
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Materiality allows other principles to b...
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.02 × $200...
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