Fundamental Accounting Principles Study Set 5
Quiz 9: Accounting for Receivables
Pledging receivables: A) Allows firms to raise cash. B) Allows a firm to retain ownership of its receivables. C) Does not transfer risk of bad debts to the lender. D) Should be disclosed in the financial statements. E) All of these.
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A company factored $45,000 of its accounts receivable and was charged a 3% factoring fee. The journal entry to record this transaction would include a: A) Debit to Cash of $45,000, a debit to Factoring Fee Expense of $1,350, and credit to Accounts Receivable of $43,650. B) Debit to Cash of $45,000 and a credit to Accounts Receivable of $45,000. C) Debit to Cash of $43,650, a debit to Factoring Fee Expense of $1,350, and a credit to Accounts Receivable of $45,000. D) Debit to Cash of $46,350 and a credit to Accounts Receivable of $46,350. E) Debit to Cash of $45,000 and a credit to Notes Payable of $45,000.
The quality of receivables refers to: A) The creditworthiness of sellers. B) The speed of collection. C) The likelihood of collection without loss. D) Sales turnover. E) The interest rate.
The account receivable turnover measures: A) How long it takes to sell accounts receivable to a factor. B) How often, on average, receivables are received and collected during the period. C) The relation of cash sales to credit sales. D) How long it takes to sell merchandise inventory. E) All of these.
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