Question 1

For a newspaper subscription,subscription revenue is always credited when cash is received from the customer.

Accepted Answer

A) True 
 B)False

Question 2

Sequential,Inc.has the following information available as of December 31,20X3:
 $\begin{array}{ll}
\text { Total } \
\text { Accounts } & 1-30 & 31-60& 61-90& \text { Over 90}\
\text { Receivable } & \text { Days } & \text { Days }& \text { Days }& \text { Days }\
\$ 60.000 & \$ 46500& \$ 7400& \$3700& \$ 2400
\end{array}$ Total credit sales for the year ended December 31,20X3,were $825,000.
The balance in the Allowance for Uncollectible Accounts at December 31,20X3,is a $500 debit.
The estimated bad debts percentages are as follows:
as a percentage of credit sales 1%
as a percentage of ending accounts receivable 10%
as a percentage of aging accounts receivable:
 $\begin{array}{ll}
1-30 \text { days } & 3 \% \
31-60 \text { days } & 15 \% \
61-90 \text { days } & 35 \% \
\text { Over } 90 \text { days } & 75 \%
\end{array}$ 
Given the previous information,prepare the journal entry on December 31,20X3,to estimate bad debts under the allowance method using the
a.percentage of credit sales method.
b.percentage of ending accounts receivable method.
c.aging of accounts receivable method.

Accepted Answer

a. Bad Debts Expense

8,250*
Allowance fo...

Question 3

Why is the timing of revenue recognition important?

Accepted Answer

A)  Revenues increase net income.
B)  Revenues reduce net income by triggering the recognition of certain expenses.
C)  Revenues increase the declaration of dividends.
D)  Increases in revenues result in higher retained earnings.
E)  both A and B

Question 4

Consider the following information:   Cash sales $59,000 Credit sales 510,000 Beginning Cash 18,000 Ending Cash 11,500 Beginning Retained Earnings 32,300 Ending Retained Earnings 41,700 Beginning Accounts Receivable 40,000 Ending Accounts Receivable 50,000 Net Income 64,000\begin{array}{ll}	ext { Cash sales } & \$ 59,000 \	ext { Credit sales } & 510,000 \	ext { Beginning Cash } & 18,000 \	ext { Ending Cash } & 11,500 \	ext { Beginning Retained Earnings } & 32,300 \	ext { Ending Retained Earnings } & 41,700 \	ext { Beginning Accounts Receivable } & 40,000 \	ext { Ending Accounts Receivable } & 50,000 \	ext { Net Income } & 64,000\end{array} Cash sales  Credit sales  Beginning Cash  Ending Cash  Beginning Retained Earnings  Ending Retained Earnings  Beginning Accounts Receivable  Ending Accounts Receivable  Net Income ​$59,000510,00018,00011,50032,30041,70040,00050,00064,000​  
Assuming a 365-day year,determine the days to collect accounts receivable.

Accepted Answer

A)  304.2 days
B)  125.0 days
C)  31.9 days
D)  32.22 days
E)  28.4 days

Question 5

What is one possible reason why the account Sales Returns and Allowances needs to be established as a contra account?

Accepted Answer

A)  So that managers can keep a running balance of returned goods in order to be able to sell the damaged goods to the employees of the organization as an incentive
B)  So that managers can produce more goods when goods get returned in order to hit monthly bonus levels
C)  So that managers can make adjustments to the manufacturing process when goods are returned for defective reasons
D)  So that factory foremen can manage when invoices are paid
E)  So that factory foremen can control the amount of credit they grant customers

Question 6

Trade discounts are journalized by

Accepted Answer

A)  decreasing returns and allowances.
B)  increasing returns and allowances.
C)  decreasing gross sales.
D)  increasing gross sales.
E)  decreasing net sales.

Question 7

Which of the following statements associated with the allowance method for bad debts is false?

Accepted Answer

A)  The write-off of an uncollectible account does not affect the accounts receivable subsidiary ledger.
B)  The write-off of an uncollectible account does not affect the total amount of current assets.
C)  The write-off of an uncollectible account does not affect current liabilities.
D)  The write-off of an uncollectible account does not affect the income statement.
E)  The write-off of an uncollectible account does not affect stockholders' equity.

Question 8

Deposits in the bank are assets to the depositor but they are liabilities to the bank.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements describes the Sarbanes-Oxley required attributes of a management report?

Accepted Answer

A)  A management report usually includes a statement on the adequacy of internal controls.
B)  A management report includes information with respect to management's compensation,including the salaries and bonuses received by the top executives of the company.
C)  A management report lists the executives of the company and states what changes have been made in management personnel since the prior period and why those changes were made.
D)  A management report states how well or poorly the company performed during the most recent period.
E)  A management report states the acquisitions and divestitures that a company has made during the current period.

Question 10

Which of the following statements is true?

Accepted Answer

A)  Trade discounts and sales returns and allowances are listed on the income statement as deductions from gross sales.
B)  Reports to shareholders often omit the details of revenue and show only net revenue.
C)  Cash Discounts on Sales are listed on the income statement as an expense of doing business.
D)  "Turnover" is commonly used in the United States to refer to net sales revenue.
E)  Cash discounts must appear on cash flow statements.

Question 11

Which of the following items from the checklist of internal control is most important?

Accepted Answer

A)  Proper authorization
B)  Separation of duties
C)  Honest,reliable personnel
D)  Adequate documents
E)  Physical safeguards

Question 12

In contrast to the gross method,the net method of accounting for cash discounts uses an ________ account.

Accepted Answer

A)  Interest Revenue
B)  Interest Expense
C)  Cash Discounts on Sales
D)  Cash Discounts for Bank Card
E)  None of the above

Question 13

The days to collect accounts receivable is calculated by dividing credit sales by the average accounts receivable.

Accepted Answer

A) True 
 B)False

Question 14

Heintz Corporation wishes to borrow $83,000 at 11% interest from the local bank.However,the bank requires a compensating balance of 10%.The effective interest rate that Heintz Corporation will pay on the loan is which of the following?

Accepted Answer

A)  10.1%
B)  12.2%
C)  13.2%
D)  16.4%
E)  14.1%

Question 15

Which statement is FALSE?

Accepted Answer

A)  Administrative controls consider the organization plan.
B)  Accounting controls include procedures that facilitate management's planning and control of operations.
C)  Accounting controls include the methods and procedures for authorizing transactions and safeguarding assets.
D)  Accounting controls are present to ensure the accuracy of the financial records.
E)  Accounting controls minimize waste,errors,and fraud within an organization.

Question 16

All else equal,the lower the accounts receivable turnover ratio and the higher the days to collect accounts receivable,the better.

Accepted Answer

A) True 
 B)False

Question 17

A bad debts recovery has what effect on the balance sheet under the allowance method for bad debts?

Accepted Answer

A)  It has no effect on total assets or stockholders' equity.
B)  It decreases assets and decreases stockholders' equity.
C)  It increases assets and decreases stockholders' equity.
D)  It decreases assets and has no effect on stockholders' equity.
E)  It has no effect on assets and decreases owner's equity.

Question 18

A company reports revenue on its income statement using

Accepted Answer

A)  gross sales less sales returns and allowances.
B)  net sales less sales returns and allowances.
C)  gross sales plus trade discounts.
D)  net sales plus trade discounts.
E)  gross sales less trade discounts plus sales returns and allowances.

Question 19

A contra asset account is created under the allowance method because of the inability to write down a specific customer's account at the time bad debts expense is recognized.

Accepted Answer

A) True 
 B)False

Question 20

An aging schedule reveals $6,500 of uncollectible accounts.The Allowance for Uncollectible Accounts currently has a credit balance of $250.The adjusting entry amount should be $6,250.

Accepted Answer

A) True 
 B)False

Exam 6: Accounting for Sales

An aging schedule reveals $6,500 of uncollectible accounts.The Allowance for Uncollectible Accounts currently has a credit balance of $250.The adjusting entry amount should be $6,250.

Correct Answer
verified

Deposits in the bank are assets to the depositor but they are liabilities to the bank.

Correct Answer
verified

Trade discounts are journalized by

Correct Answer
verified

Which of the following statements associated with the allowance method for bad debts is false?

Correct Answer
verified

Which of the following items from the checklist of internal control is most important?

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

Correct Answer
verified
a. Bad Debts Expense 8,250*
Allowance fo...
View Answer

All else equal,the lower the accounts receivable turnover ratio and the higher the days to collect accounts receivable,the better.

Correct Answer
verified

Why is the timing of revenue recognition important?

Correct Answer
verified

For a newspaper subscription,subscription revenue is always credited when cash is received from the customer.

Correct Answer
verified

Correct Answer
verified

Which statement is FALSE?

Correct Answer
verified

Which of the following statements describes the Sarbanes-Oxley required attributes of a management report?

Correct Answer
verified

A company reports revenue on its income statement using

Correct Answer
verified

A contra asset account is created under the allowance method because of the inability to write down a specific customer's account at the time bad debts expense is recognized.

Correct Answer
verified

In contrast to the gross method,the net method of accounting for cash discounts uses an ________ account.

Correct Answer
verified

The days to collect accounts receivable is calculated by dividing credit sales by the average accounts receivable.

Correct Answer
verified

A bad debts recovery has what effect on the balance sheet under the allowance method for bad debts?

Correct Answer
verified

What is one possible reason why the account Sales Returns and Allowances needs to be established as a contra account?

Correct Answer
verified

Heintz Corporation wishes to borrow $83,000 at 11% interest from the local bank.However,the bank requires a compensating balance of 10%.The effective interest rate that Heintz Corporation will pay on the loan is which of the following?

Correct Answer
verified

Exam 6: Accounting for Sales

An aging schedule reveals $6,500 of uncollectible accounts.The Allowance for Uncollectible Accounts currently has a credit balance of $250.The adjusting entry amount should be $6,250.

Correct AnswerverifiedShow Answer

Deposits in the bank are assets to the depositor but they are liabilities to the bank.

Correct AnswerverifiedShow Answer

Trade discounts are journalized by

Correct AnswerverifiedShow Answer

Which of the following statements associated with the allowance method for bad debts is false?

Correct AnswerverifiedShow Answer

Which of the following items from the checklist of internal control is most important?

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

Correct Answerverifieda. Bad Debts Expense 8,250*Allowance fo...View AnswerShow Answer

All else equal,the lower the accounts receivable turnover ratio and the higher the days to collect accounts receivable,the better.

Correct AnswerverifiedShow Answer

Why is the timing of revenue recognition important?

Correct AnswerverifiedShow Answer

For a newspaper subscription,subscription revenue is always credited when cash is received from the customer.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which statement is FALSE?

Correct AnswerverifiedShow Answer

Which of the following statements describes the Sarbanes-Oxley required attributes of a management report?

Correct AnswerverifiedShow Answer

A company reports revenue on its income statement using

Correct AnswerverifiedShow Answer

A contra asset account is created under the allowance method because of the inability to write down a specific customer's account at the time bad debts expense is recognized.

Correct AnswerverifiedShow Answer

In contrast to the gross method,the net method of accounting for cash discounts uses an ________ account.

Correct AnswerverifiedShow Answer

The days to collect accounts receivable is calculated by dividing credit sales by the average accounts receivable.

Correct AnswerverifiedShow Answer

A bad debts recovery has what effect on the balance sheet under the allowance method for bad debts?

Correct AnswerverifiedShow Answer

What is one possible reason why the account Sales Returns and Allowances needs to be established as a contra account?

Correct AnswerverifiedShow Answer

Heintz Corporation wishes to borrow $83,000 at 11% interest from the local bank.However,the bank requires a compensating balance of 10%.The effective interest rate that Heintz Corporation will pay on the loan is which of the following?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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a. Bad Debts Expense 8,250*
Allowance fo...
View Answer

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verified

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Correct Answer
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Correct Answer
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