Question

TRUE/FALSEQUESTIONS

Notes Receivableand Accounts Receivable can also be called tradereceivables. T/F

Generally acceptedaccounting principles do not normally allow the useof the direct write-off method of accounting for uncollectibleaccounts. T/F

The directwrite-off method records Bad Debt Expense in the year the specificaccount receivable is determined to be uncollectible.T/F

Although Allowancefor Doubtful Accounts normally has a credit balance, it may haveeither a debit or a credit balance before adjusting entries arerecorded at the end of the accounting period. T/F

Allowance forDoubtful Accounts is a liability account. T/F

The party promisingto pay a note at maturity is the maker T/F

If the maker of anote fails to pay the debt on the due date, the note is said to bedishonored. T/F

Multiplechoice

A 60-day, 12% note for$7,000, dated April 15, is received from a customer on account. Theface value of the note is

$7,140

 

b. $6,860

 

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d.$7,000

A $6,000, 60-day,12% note recorded on November 21 is not paid by the maker atmaturity. The journal entry to recognize this event is

The maturity valueof a $40,000, 9%, 40-day note receivable dated July 3 is

Current assets areusually listed in order

Accounts ReceivableTurnover measures

//<[CDATA[ pagespeed.dedupInlinedImages.inlineImg('pagespeed_img_mS6Z6Asfno1','pagespeed_img_mS6Z6Asfno5','pagespeed_script_6'); //]]>a. the number of days ofaccounts receivable outstanding.

 

//<[CDATA[ pagespeed.dedupInlinedImages.inlineImg('pagespeed_img_mS6Z6Asfno1','pagespeed_img_mS6Z6Asfno7','pagespeed_script_8'); //]]>b. the efficiency of theaccounts payable function.

 

//<[CDATA[ pagespeed.dedupInlinedImages.inlineImg('pagespeed_img_mS6Z6Asfno1','pagespeed_img_mS6Z6Asfno9','pagespeed_script_10'); //]]>c. the fair market valueof accounts receivable.

 

//<[CDATA[ pagespeed.dedupInlinedImages.inlineImg('pagespeed_img_mS6Z6Asfno1','pagespeed_img_mS6Z6Asfno11','pagespeed_script_12'); //]]>d. how frequently duringthe year the accounts receivable are converted to cash.

The direct write-offmethod of accounting for uncollectible accounts

//<[CDATA[ pagespeed.dedupInlinedImages.inlineImg('pagespeed_img_mS6Z6Asfno1','pagespeed_img_mS6Z6Asfno13','pagespeed_script_14'); //]]>a. emphasizes balancesheet relationships.

 

//<[CDATA[ pagespeed.dedupInlinedImages.inlineImg('pagespeed_img_mS6Z6Asfno1','pagespeed_img_mS6Z6Asfno15','pagespeed_script_16'); //]]>b. emphasizes thematching of expenses with revenues.

 

//<[CDATA[ pagespeed.dedupInlinedImages.inlineImg('pagespeed_img_mS6Z6Asfno1','pagespeed_img_mS6Z6Asfno17','pagespeed_script_18'); //]]>c. is often used bysmall companies and companies with few receivables.

 

//<[CDATA[ pagespeed.dedupInlinedImages.inlineImg('pagespeed_img_mS6Z6Asfno1','pagespeed_img_mS6Z6Asfno19','pagespeed_script_20'); //]]>d. emphasizes cashrealizable value.