Chapter 8 Quiz Question 1 An aging of accounts receivable schedule is based on the premise that the longer the period an account remains unpaid, the greater the probability that it will eventually be collected. Question 2 Allowance for Doubtful Accounts is a contra account that is deducted from Accounts Receivable on the balance sheet. Question 3 Under the allowance method, Bad Debt Expense is debited when an account is deemed uncollectible and must be written off. Question 4 Interest on a 6-month, 10 percent, $10,000 note is calculated by multiplying $10,000 ´ 0.10 ´ 6/12. Question 5 If a company has significant concentrations of credit risk, it must discuss this risk in the notes to its financial statements. Question 6 Interest is usually associated with Question 7 On January 15, Nifty Company sells merchandise on account to Martinez Associates for $3,000 with terms 3/10, n/30. On January 20, Martinez returns merchandise worth $600 to Nifty. On January 24, payment is received from Martinez for the balance due. What is the amount of cash received? Question 8 The expense recognition Question 9 Which one of the following is not a principle of sound accounts receivable management? Question 10 Bad Debt Expense is considered Question 11 When an account is written off using the allowance method, the Question 1 An aging of accounts receivable schedule is based on the premise that the longer the period an account remains unpaid, the greater the probability that it will eventually be collected. Question 2 Allowance for Doubtful Accounts is a contra account that is deducted from Accounts Receivable on the balance sheet. Question 3 Under the allowance method, Bad Debt Expense is debited when an account is deemed uncollectible and must be written off. Question 4 Interest on a 6-month, 10 percent, $10,000 note is calculated by multiplying $10,000 ´ 0.10 ´ 6/12. Question 5 If a company has significant concentrations of credit risk, it must discuss this risk in the notes to its financial statements. Question 6 Interest is usually associated with Question 7 On January 15, Nifty Company sells merchandise on account to Martinez Associates for $3,000 with terms 3/10, n/30. On January 20, Martinez returns merchandise worth $600 to Nifty. On January 24, payment is received from Martinez for the balance due. What is the amount of cash received? Question 8 The expense recognition Question 9 Which one of the following is not a principle of sound accounts receivable management? Question 10 Bad Debt Expense is considered Question 11 When an account is written off using the allowance method, the Question 12 All of the following statements regarding the financial statement presentation of receivables are true except: Question 13 Which of the following is not true regarding a promissory note? Question 14 The bookkeeper recorded the following journal entry Allowance for Doubtful Accounts � � 1,000 � � Accounts Receivable “� Richard James � � � � 1,000 Which one of the following statements is false? Question 15 The direct write-off method is acceptable for financial reporting purposes only if the bad debt losses are insignificant. Question 16 When calculating interest on a promissory note with the maturity date stated in terms of days, the Question 17 The interest on a $4,000, 9%, 90-day note receivable is Question 18 Which of the following is a way of disposing of a note receivable? Question 19 The accounts receivable turnover Question 20 Match the items below by entering the appropriate code letter in the space provided.
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