SO1 Chapter 8 Reporting and Analyzing Receivables Identify the different types of receivables'

1
SO1 Chapter 8 Reporting and Analyzing
ReceivablesIdentify the different types of
receivables.

• ____ receivables include non trade receivables
  such as loans to company officers.

Answer Other
2
SO1 Chapter 8 Reporting and Analyzing
ReceivablesIdentify the different types of
receivables.

• Interest is usually associated with ___
  receivable.

Answer notes
3
SO1 Chapter 8 Reporting and Analyzing
ReceivablesIdentify the different types of
receivables.

• Notes or accounts receivables that result from
  sales transactions are often called ___
  receivables.

Answer trade
4
SO1 Chapter 8 Reporting and Analyzing
ReceivablesIdentify the different types of
receivables.

• The term ____ refers to amounts due from
  individuals or companies.

Answer receivables
5
SO2 Chapter 8 Reporting and Analyzing Receivables
Explain how accounts receivable are recognized
in the accounts.

• What are the three accounting issues associated
  with accounts receivable?

Answer Recognizing, valuing, and accelerating
collections.
6
SO3 Chapter 8 Reporting and Analyzing
ReceivablesDescribe the methods used to account
for bad debts.

• An aging of accounts receivable schedule is based
  on the premise that the longer the period an
  account remains unpaid, the ___ the probability
  that it will eventually be collected.

Answer lesser
7
SO3 Chapter 8 Reporting and Analyzing
ReceivablesDescribe the methods used to account
for bad debts.

• The _____ method of accounting for bad debts
  violates the matching principle.

Answer direct write-off
8
SO3 Chapter 8 Reporting and Analyzing
ReceivablesDescribe the methods used to account
for bad debts.

• Under the ____ method, no attempt is made to
  match bad debt expense to sales revenues in the
  same accounting period.

Answer direct write-off
9
SO3 Chapter 8 Reporting and Analyzing
ReceivablesDescribe the methods used to account
for bad debts.

• The account Allowance for Doubtful Accounts is
  classified as a(n) ______ account to Accounts
  Receivable.

Answer contra
10
SO3 Chapter 8 Reporting and Analyzing
ReceivablesDescribe the methods used to account
for bad debts.

• The ___ principle necessitates the recording of
  an estimated amount for bad debts.

Answer matching
11
SO3 Chapter 8 Reporting and Analyzing
ReceivablesDescribe the methods used to account
for bad debts.

• Under the allowance method, writing off an
  uncollectible account affects which financial
  statement?

Answer Only the balance sheet accounts
12
SO3 Chapter 8 Reporting and Analyzing
ReceivablesDescribe the methods used to account
for bad debts.

• The net amount expected to be received in cash
  from receivables is termed the ___ ___ value.

Answer cash realizable
13
SO3 Chapter 8 Reporting and Analyzing
ReceivablesDescribe the methods used to account
for bad debts.

• If the amount of uncollectible account expense is
  understated at year end net Accounts Receivable
  will be ______.

Answer overstated
14
SO3 Chapter 8 Reporting and Analyzing
ReceivablesDescribe the methods used to account
for bad debts.

• The matching rule relates to credit losses by
  stating that bad debt expense should be recorded
  in the period of the ____.

Answer sale
15
SO3 Chapter 8 Reporting and Analyzing
ReceivablesDescribe the methods used to account
for bad debts.

• When the allowance method is used to account for
  uncollectible accounts, Bad Debts Expense is
  debited when management estimates the amount of
  ______.

Answer uncollectibles.
16
SO3 Chapter 8 Reporting and Analyzing
ReceivablesDescribe the methods used to account
for bad debts.

• When an account becomes uncollectible and must be
  written off ____ should be credited.

Answer Accounts Receivable
17
SO3 Chapter 8 Reporting and Analyzing
ReceivablesDescribe the methods used to account
for bad debts.

• The ________ method of accounting for
  uncollectible accounts is not generally accepted
  as a basis for estimating bad debts.

Answer direct write-off
18
SO3 Chapter 8 Reporting and Analyzing
ReceivablesDescribe the methods used to account
for bad debts.

• An aging of a companys accounts receivable
  indicates that 400 are estimated to be
  uncollectible. If Allowance for Doubtful
  Accounts has a 120 credit balance, the
  adjustment to record bad debts for the period
  would be what entry?

Answer Debit Bad Debts Expense 280 Credit
Allowance for Doubtful Accounts 280
19
SO3 Chapter 8 Reporting and Analyzing
ReceivablesDescribe the methods used to account
for bad debts.

• An alternative name for Bad Debts Expense is
  ______.

Answer Uncollectible Accounts Expense
20
SO3 Chapter 8 Reporting and Analyzing
ReceivablesDescribe the methods used to account
for bad debts.

• What are the two methods of accounting for
  uncollectible accounts?

Answer Direct write-off and allowance methods
21
SO3 Chapter 8 Reporting and Analyzing
ReceivablesDescribe the methods used to account
for bad debts.

• Bad Debts Expense is reported on the Income
  Statement as an _____ expense.

Answer operating
22
SO3 Chapter 8 Reporting and Analyzing
ReceivablesDescribe the methods used to account
for bad debts.

• Allowance for Doubtful Accounts on the balance
  sheet is deducted from _________.

Answer Accounts Receivable
23
SO3 Chapter 8 Reporting and Analyzing
ReceivablesDescribe the methods used to account
for bad debts.

• A customer has gone bankrupt and will not make
  any future payments. What is the journal entry
  using the allowance method?

Answer Debit Allowance for Doubtful
Accounts Credit Accounts Receivable
24
SO3 Chapter 8 Reporting and Analyzing
ReceivablesDescribe the methods used to account
for bad debts.

• When an account is written off using the
  allowance method, accounts receivable ____ and
  the allowance account ____. (decrease or
  increase)

Answer decreases, decreases
25
SO3 Chapter 8 Reporting and Analyzing
ReceivablesDescribe the methods used to account
for bad debts.

• Using the percentage of receivables method for
  recording bad debts expense, estimated
  uncollectible accounts are 2,500. If the
  balance of the Allowance for Doubtful Accounts is
  800 debit before the adjustment, what is the
  amount of bad debt expense for that period?

Answer 3,300
26
SO3 Chapter 8 Reporting and Analyzing
ReceivablesDescribe the methods used to account
for bad debts.

• Under the direct write-off method of accounting
  for uncollectible accounts, a specific account is
  decreased for the actual amount of bad debt at
  what time?

Answer Time of the write-off
27
SO3 Chapter 8 Reporting and Analyzing
ReceivablesDescribe the methods used to account
for bad debts.

• The balance of Allowance for Doubtful Accounts
  prior to making the adjusting entry to record Bad
  Debts Expense is relevant when using the _____ of
  receivables basis.

Answer percentage
28
SO4 Chapter 8 Reporting and Analyzing
ReceivablesCompute the interest on notes
receivable.

• When the due date of a note is stated in months,
  the time factor in computing interest is the
  number of months divided by _____.

Answer 12
29
SO4 Chapter 8 Reporting and Analyzing
ReceivablesCompute the interest on notes
receivable.

• Interest on a 6-month, 10 percent, 20,000 note
  is calculated by multiplying 20,000 X ____ X
  ____.

Answer .10 x 6/12
30
SO4 Chapter 8 Reporting and Analyzing
ReceivablesCompute the interest on notes
receivable.

• What is the basic formula for computing interest
  on an interest-bearing note?

Answer Face value of note X annual interest rate
X time in terms of one year Interest
31
SO4 Chapter 8 Reporting and Analyzing
ReceivablesCompute the interest on notes
receivable.

• Two key parties to a promissory note are the ____
  and the payee.

Answer maker
32
SO4 Chapter 8 Reporting and Analyzing
ReceivablesCompute the interest on notes
receivable.

• When calculating interest on a promissory note
  with the maturity date stated in terms of days,
  the payee receives for interest if (360 or 365?)
  is used.

Answer 360
33
SO4 Chapter 8 Reporting and Analyzing
ReceivablesCompute the interest on notes
receivable.

• The interest on a 2,000, 6, 90-day note
  receives is ____.

Answer 30
34
SO4 Chapter 8 Reporting and Analyzing
ReceivablesCompute the interest on notes
receivable.

• When a company receives an interest-bearing note
  receivable, what account will be debited?

Answer Notes Receivable for the face value of
the note
35
SO5 Chapter 8 Reporting and Analyzing Receivables
Describe the entries to record the disposition
of notes receivable.

• The maturity value of a 2,000, 6, 60-day note
  receivable dated February 10th is _____.

Answer 2,020
36
SO5 Chapter 8 Reporting and Analyzing Receivables
Describe the entries to record the disposition
of notes receivable.

• When a note is dishonored the payees entry
  includes a credit to ________.

Answer Notes Receivable
37
SO5 Chapter 8 Reporting and Analyzing Receivables
Describe the entries to record the disposition
of notes receivable.

• A dishonored note is a note that is __ ___ in
  full at maturity.

Answer not paid
38
SO6 Chapter 8 Reporting and Analyzing Receivables
Explain the statement presentation of
receivables.

• Both the gross amount of receivables and the
  allowance for doubtful accounts should be
  reported in what financial statement?

Answer balance sheet
39
SO7 Chapter 8 Reporting and Analyzing Receivables
Describe the principles of sound accounts
receivable management.

• If a company has a significant concentration of
  credit risk, it is required to discuss that in
  its ____ to its financial statements.

Answer notes
40
SO7 Chapter 8 Reporting and Analyzing Receivables
Describe the principles of sound accounts
receivable management.

• A ________ is a threat of nonpayment from a
  single customer or class of customers that could
  adversely affect the financial health of the
  company.

Answer concentration of credit risk
41
SO7 Chapter 8 Reporting and Analyzing Receivables
Describe the principles of sound accounts
receivable management.

• What are some principles of sound accounts
  receivable management?

Answer Determine to whom to extend credit,
monitor collections, determine payment period.
42
SO8 Chapter 8 Reporting and Analyzing Receivables
Identify ratios to analyze a companys
receivables.

• The ______ ratio is needed to calculate the
  average collection period in days.

Answer receivable turnover
43
SO8 Chapter 8 Reporting and Analyzing Receivables
Identify ratios to analyze a companys
receivables.

• The receivables turnover ratio is computed by
  dividing what?

Answer Net credit sales by average receivables
44
SO8 Chapter 8 Reporting and Analyzing Receivables
Identify ratios to analyze a companys
receivables.

• The receivable turnover ratio is used to analyze
  _____.

Answer liquidity
45
SO8 Chapter 8 Reporting and Analyzing Receivables
Identify ratios to analyze a companys
receivables.

• A (high or low?) receivable turnover ratio
  indicates customers are making payments very
  quickly.

Answer high
46
SO8 Chapter 8 Reporting and Analyzing Receivables
Identify ratios to analyze a companys
receivables.

• The average collection period for receivables is
  computed by dividing 365 days by _______.

Answer receivables turnover ratio
47
SO8 Chapter 8 Reporting and Analyzing Receivables
Identify ratios to analyze a companys
receivables.

• The financial statements of ABC Company reports
  net sales of 400,000 and accounts receivable of
  80,000 and 40,000 at the beginning of the year
  and end of year, respectively. What is the
  receivables turnover ratio for ABC?

Answer 6.7 times
48
SO8 Chapter 8 Reporting and Analyzing Receivables
Identify ratios to analyze a companys
receivables.

• The financial statements of ABC Company reports
  net sales of 400,000 and accounts receivable of
  80,000 and 40,000 at the beginning of the year
  and end of year, respectively. What is the
  average collection period for accounts receivable
  in days?

Answer 59.7 times
49
SO9 Chapter 8 Reporting and Analyzing Receivables
Describe methods to accelerate the receipt of
cash from receivables.

• The retailer considers VISA and MasterCard sales
  as ________.

Answer cash sales
50
SO9 Chapter 8 Reporting and Analyzing Receivables
Describe methods to accelerate the receipt of
cash from receivables.

• A ____ buys receivables from businesses for a fee
  and collects the payment directly from customers.

Answer factor