NOTE: For multiple-choice and true/false questions, simply place your cursor over what you think is the correct answer.
(There is no need to click the answer.) For fill-in-the-blank questions place your cursor over the
_________.
If you have any difficulty answering the questions, learn more about this topic by reading our mini-lectures covering introductory to Accounts Receivable and Bad Debts Expense.
| 1. |
When a sale is made with the credit terms of 2/10, net 30, the "10" refers to the _______________ period.
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| 2. |
On June 1, $800 of goods are sold with credit terms of 1/10, n/30. How much should the seller expect to receive if the buyer pays on June 8? |
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$720
$784
$792
$800
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| 3. |
On June 1, $800 of goods are sold with credit terms of 1/10, n/30. On June 3 the customer returned $100 of the goods. How much should the seller expect to receive if the buyer pays on June 8? |
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$692
$693
$700
$792
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| 4. |
With credit terms of 2/10, n/30, the annual interest rate for paying in 10 days instead of 30 days is closest to |
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2%
24%
30%
36%
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| 5. |
When the terms of a sale are FOB ________________, ownership of goods will transfer to the customer at the customer's dock.
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| 6. |
The seller is responsible for the costs of shipping its goods to the buyer when the terms of the sale are FOB |
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Destination
Shipping Point
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| 8. |
When the Allowance for Doubtful Accounts appears on a company's financial statements, its balance will be a __________ balance. |
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debit
credit
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| 10. |
Which method of reporting losses on accounts receivable is required in the U.S. for income tax purposes? |
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allowance
direct write-off
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| 11. |
Which method of reporting losses on accounts receivable is to be used for financial reporting? |
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allowance
direct write-off
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| 12. |
The seller of goods that is offering credit terms of net 30 days will likely be one of its customer's _____________ creditors until it receives payment. |
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secured
unsecured
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| 13. |
After several years of operations, a company's Bad Debts Expense for a given year is likely to be the same as its balance in Allowance for Doubtful Accounts. |
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True
False
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| 14. |
A company estimates that $20,000 of its $500,000 of accounts receivable will be uncollectible. Its Allowance for Doubtful Accounts presently has a credit balance of $8,000. The adjusting entry will include a ___________________ to the Allowance for Doubtful Accounts. |
debit of $12,000
credit of $12,000
debit of $28,000
credit of $28,000
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| 15. |
A company estimates that $20,000 of its $500,000 of accounts receivable will be uncollectible. Its Allowance for Doubtful Accounts presently has a credit balance of $18,000. The adjusting entry will include a ____________________ to Bad Debts Expense. |
debit of $2,000
credit of $2,000
debit of $38,000
credit of $38,000
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Use the following information for questions 17-21:
A company is expecting thousands of credit sales transactions each week with terms of net 30 days. The company uses the allowance method and it prepares weekly financial statements. It believes that 0.001 of its credit sales will be uncollectible. The company's credit sales for its first week of operations are $500,000. The credit sales for its second week are $600,000.
| 17. |
The company's bad debts expense for its first week of operations will be $__________.
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| 18. |
The balance in Allowance for Doubtful Accounts at the end of the first week will likely be $____________.
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| 19. |
The company's bad debts expense for its second week of operations will be $___________.
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| 20. |
The amount of accounts receivable that you expect will be written off by the end of the company's second week of operations is $___________.
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| 21. |
The balance in Allowance for Doubtful Accounts at the end of the second week of operations will likely be $_____________.
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Use the following information for questions 22-25:
A company's Allowance for Doubtful Accounts has a credit balance of $25,000. It learns that one of its accounts receivable amounting to $1,800 is worthless and needs to be written off.
| 26. |
Sorting a company's accounts receivable into classifications such as current, 1-30 days past due, and 31-60 days past due is known as the ___________ of accounts receivables.
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| 27. |
The receivable turnover ratio is computed by dividing the net credit __________ for the year by the average amount of accounts receivable during the year.
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| 28. |
The days' sales in accounts receivable is calculated by dividing ________ days by the receivables turnover ratio during the year.
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| 29. |
A company's accounts receivable minus its allowance for doubtful accounts equals the net ________________ value of the accounts receivable.
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| 30. |
In some industries, companies often sell their accounts receivable to a firm known as a ______________.
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If you have any difficulty answering the questions, learn more about this topic by reading our mini-lectures covering introductory to Accounts Receivable and Bad Debts Expense.
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