Question 1

Which of the following is a true statement about a company that uses the allowance method?

Accepted Answer

A)   Uncollectible Accounts Expense is recorded when a receivable is written off.
B)   Uncollectible accounts are not recorded until the amount becomes significant.
C)   The net realizable value of its accounts receivable is shown on the balance sheet.
D)   None of these answer choices are correct.E) C) and D)
F) A) and C)

Question 2

Some accountants believe that the percent of revenue method for estimating uncollectible accounts expense is superior to the percent of receivables method because it is more conservative.

Accepted Answer

A) True 
 B)False

Question 3

Which one of the following is not an accurate description of the Allowance for Doubtful Accounts?

Accepted Answer

A)   The account is a contra account.
B)   The account is a liability.
C)   The amount of the Allowance for Doubtful Accounts decreases the net realizable value of a company's receivables.
D)   The account is increased by an estimate of uncollectible accounts expense.E) B) and D)
F) B) and C)

Question 4

Match between columns
                        Premises: The direct write-off method is easier to use than the allowance method.
The direct write-off method is allowed for some companies because of the going concern concept.
The direct write-off method requires an advance estimate of anticipated uncollectible accounts.
The direct write-off method is not permitted by GAAP if uncollectible accounts expense is immaterial.
The direct write-off method does not require the use of an allowance account.

Accepted Answer

The Answer of False and True is...

Question 5

The accounting records of the Harris and Schubert Companies contained the following account balances:
  Sales  Accounts receivable  Harris $300,000$60,000 Schubert 180,00040,000\begin{array} { l c c } & 	ext { Sales } & 	ext { Accounts receivable } \	ext { Harris } & \$ 300,000 & \$ 60,000 \	ext { Schubert } & 180,000 & 40,000\end{array} Harris  Schubert ​ Sales $300,000180,000​ Accounts receivable $60,00040,000​ 
Which of the following statements is true?

Accepted Answer

A)   Schubert Company has a lower likelihood of lost income resulting from credit costs.
B)   The company with the higher accounts receivable turnover ratio will also have the longer average number of days to collect accounts receivable.
C)   The accounts receivable for Schubert Company turns over 6 times each year.
D)   The average number of days to collect accounts receivable for Harris is 73 days. E) A) and B)
F) All of the above

Question 6

[The following information applies to the questions displayed below.]
The Yankee Corporation has recently begun to accept credit cards. On July 7, Year 1, Yankee made a credit card sale of $600. The credit card company charges a fee of 3% for handling a credit card transaction.
-Which of the following correctly shows the effects of the sale on July 7?

Accepted Answer

A)   Option A
B)   Option B
C)   Option C
D)   Option DE) A) and B)
F) A) and C)

Question 7

The direct write-off method overstates assets on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 8

Hoff Company uses the allowance method.An account that had been previously written-off as uncollectible was recovered.How do the two parts of the recovery (reinstate receivable and collect the receivable) affect the elements of the financial statements when the two parts are considered together?

Accepted Answer

A)   Increase total assets and stockholders' equity
B)   Increase total assets and decrease total liabilities
C)   Decrease total liabilities and increase stockholders' equity
D)   Has no effect on total assets, total liabilities or stockholders' equityE) A) and B)
F) None of the above

Question 9

The direct write-off method does a better job of matching revenues and expenses than does the allowance method.

Accepted Answer

A) True 
 B)False

Question 10

The adjustment to recognize uncollectible accounts expense does not affect the net realizable value of receivables.

Accepted Answer

A) True 
 B)False

Question 11

[The following information applies to the questions displayed below.]
The Yankee Corporation has recently begun to accept credit cards. On July 7, Year 1, Yankee made a credit card sale of $600. The credit card company charges a fee of 3% for handling a credit card transaction.
-Which of the following correctly describes the effect of the collection of cash from the credit card company on the financial statements of Yankee Corporation?

Accepted Answer

A)   Option A
B)   Option B
C)   Option C
D)   Option DE) B) and C)
F) B) and D)

Question 12

Using the allowance method of accounting for uncollectible receivables requires an estimate of the amount of receivables that will not be collected.

Accepted Answer

A) True 
 B)False

Question 13

With the direct write-off method,writing off an account receivable is an asset use transaction.

Accepted Answer

A) True 
 B)False

Exam 7: Accounting for Receivables

Using the allowance method of accounting for uncollectible receivables requires an estimate of the amount of receivables that will not be collected.

Correct Answer
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The adjustment to recognize uncollectible accounts expense does not affect the net realizable value of receivables.

Correct Answer
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Hoff Company uses the allowance method.An account that had been previously written-off as uncollectible was recovered.How do the two parts of the recovery (reinstate receivable and collect the receivable) affect the elements of the financial statements when the two parts are considered together?

Correct Answer
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Which of the following is a true statement about a company that uses the allowance method?

Correct Answer
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Correct Answer
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Which one of the following is not an accurate description of the Allowance for Doubtful Accounts?

Correct Answer
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Correct Answer
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Some accountants believe that the percent of revenue method for estimating uncollectible accounts expense is superior to the percent of receivables method because it is more conservative.

Correct Answer
verified

Correct Answer
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The direct write-off method overstates assets on the balance sheet.

Correct Answer
verified

The direct write-off method does a better job of matching revenues and expenses than does the allowance method.

Correct Answer
verified

With the direct write-off method,writing off an account receivable is an asset use transaction.

Correct Answer
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One of the methods for recognizing uncollectible accounts is the direct write-off method.Indicate whether each of the following statements is true or false.

Exam 7: Accounting for Receivables

Using the allowance method of accounting for uncollectible receivables requires an estimate of the amount of receivables that will not be collected.

Correct AnswerverifiedShow Answer

The adjustment to recognize uncollectible accounts expense does not affect the net realizable value of receivables.

Correct AnswerverifiedShow Answer

Hoff Company uses the allowance method.An account that had been previously written-off as uncollectible was recovered.How do the two parts of the recovery (reinstate receivable and collect the receivable) affect the elements of the financial statements when the two parts are considered together?

Correct AnswerverifiedShow Answer

Which of the following is a true statement about a company that uses the allowance method?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following is not an accurate description of the Allowance for Doubtful Accounts?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Some accountants believe that the percent of revenue method for estimating uncollectible accounts expense is superior to the percent of receivables method because it is more conservative.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The direct write-off method overstates assets on the balance sheet.

Correct AnswerverifiedShow Answer

The direct write-off method does a better job of matching revenues and expenses than does the allowance method.

Correct AnswerverifiedShow Answer

With the direct write-off method,writing off an account receivable is an asset use transaction.

Correct AnswerverifiedShow Answer

One of the methods for recognizing uncollectible accounts is the direct write-off method.Indicate whether each of the following statements is true or false.

Correct Answer
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