Question 1

Allowance for Doubtful Accounts has an unadjusted balance of $1,100 at the end of the year,and an analysis of customers' accounts indicates doubtful accounts of $12,900.Which of the following records the proper provision for doubtful accounts?
A)Increase Uncollectible Accounts Expense,$14,000; increase Allowance for Doubtful Accounts,$14,000
B)Decrease Allowance for Doubtful Accounts,$14,000; decrease Uncollectible Accounts Expense,$14,000
C)Decrease Allowance for Doubtful Accounts,$11,800; decrease Uncollectible Accounts Expense,$11,800
D)Increase Uncollectible Accounts Expense,$11,800; increase Allowance for Doubtful Accounts,$11,800

Accepted Answer

The proper provision for doubtful accounts is to increase the Uncollectible Accounts Expense and the Allowance for Doubtful Accounts by the same amount. In this case, the analysis of customers' accounts indicates doubtful accounts of $12,900, so the provision should be $12,900 - $1,100 (unadjusted balance) = $11,800. Therefore, the correct entry is to increase both the Uncollectible Accounts Expense and Allowance for Doubtful Accounts by $11,800. Option D correctly records this entry.

Question 2

Taxes receivable is classified as:
A)other receivable.
B)notes receivable.
C)accounts receivable.
D)trade receivables.

Accepted Answer

Taxes receivable is a type of other receivable, as it represents money owed to the company by a third party (such as customers or other businesses) for tax payments. It is not considered a trade receivable, as it does not arise from the sale of goods or services, nor a notes receivable, as it does not involve the issuance of a promissory note.

Question 3

Allowance for Doubtful Accounts has an unadjusted balance of $800 at the end of the year,and an analysis of accounts in the customers' ledger indicates doubtful accounts of $15,000.Which of the following records the proper provision for doubtful accounts?
A)Increase Uncollectible Accounts Expense,$800; increase Allowance for Doubtful Accounts,$800
B)Increase Uncollectible Accounts Expense $15,000; increase Allowance for Doubtful Accounts,$15,000
C)Increase Uncollectible Accounts Expense,$14,200; increase Allowance for Doubtful Accounts,$14,200
D)Increase Uncollectible Accounts Expense,$15,800; increase Allowance for Doubtful Accounts,$15,800

Accepted Answer

The proper provision for doubtful accounts is based on an analysis of accounts in the customers' ledger, which indicates doubtful accounts of $15,000. The unadjusted balance of the Allowance for Doubtful Accounts is $800, so the provision for doubtful accounts should be recorded for the difference of $14,200 ($15,000 - $800). Therefore, the correct entry is to increase Uncollectible Accounts Expense by $14,200 and increase Allowance for Doubtful Accounts by $14,200. Option A is incorrect because it only records the unadjusted balance of $800, which is not sufficient to cover the analysis of doubtful accounts. Option B is incorrect because it records the total doubtful accounts of $15,000, which is not the correct provision amount. Option D is incorrect because it records the total doubtful accounts of $15,000 and the unadjusted balance of $800, which would result in an over-provision.

Question 4

A note receivable due in 18 months is listed on the balance sheet under the caption:
A)long-term liabilities.
B)fixed assets.
C)current assets.
D)investments.

Accepted Answer

The answer of A note receivable due in 18 months...

Question 5

A 90-day,8% note for $10,000 dated May 1 is received from a customer on account.The maturity value of the note is (Assume 360 days in a year):
A)$10,000.
B)$10,800.
C)$10,200.
D)$9,800.

Accepted Answer

The maturity value of the note is calculated by adding the interest earned to the principal amount. Interest = Principal × Rate × Time = $10,000 × 8% × (90/360) = $200. Therefore, the maturity value = Principal + Interest = $10,000 + $200 = $10,200.

Question 6

Allowance for Doubtful Accounts has an unadjusted balance of $500 at the end of the year,and an analysis of accounts in the customers' ledger indicates doubtful accounts of $15,000.Compute the adjusted balance in the allowance for doubtful accounts?
A)$15,000
B)$14,500
C)$14,000
D)$15,500

Accepted Answer

The adjusted balance in the Allowance for Doubtful Accounts should directly reflect the estimated doubtful accounts, which is $15,000, regardless of its unadjusted balance.

Question 7

The due date of a 60-day note dated July 12 is:
A)September 11.
B)September 8.
C)September 9.
D)September 10.

Accepted Answer

The answer of The due date of a 60-day note...

Question 8

A 60-day,12% note for $15,000 dated May 1 is received from a customer on account.The maturity value of the note is (Assume 360 days in a year):
A)$15,300.
B)$15,000.
C)$14,700.
D)$16,800.

Accepted Answer

First, we need to calculate the interest on the note which will be 12% of $15,000 for 60 days (2 months) or:

($15,000 x 0.12)/360 x 60 = $300

Next, we add the interest to the principal amount to get the maturity value of the note, or:

$15,000 + $300 = $15,300

Therefore, the correct answer is A) $15,300.

Question 9

The amount of the promissory note plus the interest earned on the due date is called the:
A)market value.
B)maturity value.
C)face value.
D)discounted value.

Accepted Answer

The maturity value of a promissory note is the amount of the note plus the interest earned on the due date. This represents the total amount that the debtor owes to the creditor. The market value refers to the current value of an asset in the market, which may or may not be the same as the maturity value. The face value is the initial amount of the note, before any interest is added. The discounted value is the present value of the note, after taking into account any interest that has been discounted.

Question 10

The due date of a 90-day note dated July 5 is:
A)September 30.
B)October 2.
C)October 3.
D)October 1.

Accepted Answer

To find the due date of a 90-day note, we add 90 days to the date it was issued. July 5 + 90 days = October 3. Therefore, the answer is C.

Question 11

In reference to a promissory note,the person who is to receive payment is called the:
A)maker.
B)payee.
C)seller.
D)payer.

Accepted Answer

The payee is the person who is to receive payment on a promissory note. The maker is the person who promises to pay the money, the seller is the person who sold the item or service that is being paid for, and the payer could refer to either the maker or someone who makes a partial payment on the note.

Question 12

After the accounts are adjusted at the end of the fiscal year,Accounts Receivable has a balance of $430,000 and Allowance for Doubtful Accounts has a balance of $30,000.What is the net realizable value of the receivables?
A)$30,000
B)$460,000
C)$430,000
D)$400,000

Accepted Answer

The net realizable value of the receivables is calculated by subtracting the allowance for doubtful accounts from the accounts receivable balance. Therefore, the net realizable value is $400,000 ($430,000 - $30,000). Thus, option D is the correct answer.

Question 13

After the accounts are adjusted and closed at the end of the fiscal year,Accounts Receivable has a balance of $500,000 and Allowance for Doubtful Accounts has a balance of $25,000.What is the net realizable value of the accounts receivable?
A)$25,000
B)$525,000
C)$500,000
D)$475,000

Accepted Answer

The net realizable value of the accounts receivable is the difference between the Accounts Receivable balance and the Allowance for Doubtful Accounts balance, which is $475,000 ($500,000 - $25,000). Therefore, the correct answer is D.

Question 14

A 90-day,10% note for $10,000 dated April 1 is received from a customer on account.The face value of the note is:
A)$10,000.
B)$11,000.
C)$1,000.
D)$9,000.

Accepted Answer

The face value of the note is the amount written on the note, which in this case is $10,000. Therefore, the correct answer is A) $10,000.

Question 15

A 90-day,10% note for $10,000 dated March 15 is received from a customer on account.The face value of the note is:
A)$10,250.
B)$9,000.
C)$9,750.
D)$10,000.

Accepted Answer

The face value of the note is the amount written on the note itself, which is $10,000.

Question 16

One of the weaknesses of the direct write-off method is that it:
A)understates accounts receivable on the balance sheet.
B)violates the matching principle.
C)adjusts allowance account the end of the year.
D)is based on estimates.

Accepted Answer

The direct write-off method violates the matching principle because it does not match the expense of writing off a bad debt with the revenue earned in the same period. It also does not provide for an estimate of uncollectible accounts, making it unreliable and not in accordance with generally accepted accounting principles.

Question 17

What type of account is Allowance for Doubtful Accounts?
A)Contra asset account
B)Asset account
C)Liability account
D)Expense account

Accepted Answer

Allowance for Doubtful Accounts is a contra asset account, which means it is deducted from accounts receivable to calculate the net realizable value of accounts receivable. This account reflects the estimated amount of accounts receivable that may not be collected, which is why it is shown as a negative balance in the balance sheet.

Question 18

The process of a company selling its accounts receivable to another company is referred as:
A)discounting.
B)adjusting.
C)assignment.
D)factoring.

Accepted Answer

The correct term for a company selling its accounts receivable is factoring. Factoring is a financial transaction where a company sells its accounts receivable to a third party, referred to as a factor, at a discount in exchange for immediate cash. This allows the original company to improve its cash flow and avoid the risks and costs associated with collecting their own receivables.

Question 19

The two methods of accounting for uncollectible receivables are the:
A)direct method and the indirect method.
B)allowance method and the direct write-off method.
C)cash method and the accrual method.
D)percent of sales method and the analysis of receivables method.

Accepted Answer

The two methods of accounting for uncollectible receivables are the allowance method and the direct write-off method. The allowance method establishes a contra asset account for uncollectible accounts, while the direct write-off method writes off uncollectible accounts once they are identified as such. The allowance method is the preferred method because it adheres to the matching principle and provides a more accurate portrayal of the company's financial position.

Question 20

Allowance for Doubtful Accounts is listed on the balance sheet under the caption:
A)stockholders' equity.
B)investments.
C)fixed assets.
D)current assets.

Accepted Answer

Allowance for Doubtful Accounts is a contra-asset account that offsets accounts receivable, a current asset, and is therefore listed on the balance sheet as a deduction from accounts receivable accounts in the current assets section.

Quiz 6: Receivables and Inventories

Allowance for Doubtful Accounts has an unadjusted balance of $1,100 at the end of the year,and an analysis of customers' accounts indicates doubtful accounts of $12,900.Which of the following records the proper provision for doubtful accounts?

Taxes receivable is classified as:

Allowance for Doubtful Accounts has an unadjusted balance of $800 at the end of the year,and an analysis of accounts in the customers' ledger indicates doubtful accounts of $15,000.Which of the following records the proper provision for doubtful accounts?

A note receivable due in 18 months is listed on the balance sheet under the caption:

A 90-day,8% note for $10,000 dated May 1 is received from a customer on account.The maturity value of the note is (Assume 360 days in a year) :

Allowance for Doubtful Accounts has an unadjusted balance of $500 at the end of the year,and an analysis of accounts in the customers' ledger indicates doubtful accounts of $15,000.Compute the adjusted balance in the allowance for doubtful accounts?

The due date of a 60-day note dated July 12 is:

A 60-day,12% note for $15,000 dated May 1 is received from a customer on account.The maturity value of the note is (Assume 360 days in a year) :

The amount of the promissory note plus the interest earned on the due date is called the:

The due date of a 90-day note dated July 5 is:

In reference to a promissory note,the person who is to receive payment is called the:

After the accounts are adjusted at the end of the fiscal year,Accounts Receivable has a balance of $430,000 and Allowance for Doubtful Accounts has a balance of $30,000.What is the net realizable value of the receivables?

After the accounts are adjusted and closed at the end of the fiscal year,Accounts Receivable has a balance of $500,000 and Allowance for Doubtful Accounts has a balance of $25,000.What is the net realizable value of the accounts receivable?

A 90-day,10% note for $10,000 dated April 1 is received from a customer on account.The face value of the note is:

A 90-day,10% note for $10,000 dated March 15 is received from a customer on account.The face value of the note is:

One of the weaknesses of the direct write-off method is that it:

What type of account is Allowance for Doubtful Accounts?

The process of a company selling its accounts receivable to another company is referred as:

The two methods of accounting for uncollectible receivables are the:

Allowance for Doubtful Accounts is listed on the balance sheet under the caption: