12 Accounting - December 3, 2015 - Quiz, Trivia & Questions

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| By Jan Morrison

Jan Morrison

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Quizzes Created: 3 | Total Attempts: 2,088

Questions: 10 | Attempts: 73 | Updated: Mar 20, 2023

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Basic accounting entails knowing what is being debited and what is being credited to an account. Other than that there is knowledge of how to treat the different transactions in the company’s books. Test your basic knowledge of accounting by taking the simple quiz below. All the best of luck!

Questions and Answers

1.

What type of account is Allowance for Doubtful Accounts?
- A.
  
  Asset
- B.
  
  Expense
- C.
  
  Contra-asset
- D.
  
  Contra-expense
Correct Answer
C. Contra-asset

Explanation
Allowance for Doubtful Accounts is a contra-asset account. Contra-asset accounts are used to reduce the value of the related asset account. In this case, Allowance for Doubtful Accounts is used to reduce the value of Accounts Receivable, which is an asset account. It represents the estimated amount of accounts receivable that may not be collected. By deducting the allowance from the accounts receivable, the net realizable value of the asset is shown.

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2.

Which of the following accounts gets closed at the end of the fiscal period?
- A.
  
  Bad debt expense
- B.
  
  Allowance for doubtful accounts
- C.
  
  Accounts receivable
- D.
  
  All of the above
Correct Answer
A. Bad debt expense

Explanation
At the end of the fiscal period, the account "bad debt expense" gets closed. This is because bad debt expense is an expense account that represents the estimated amount of accounts receivable that is unlikely to be collected. At the end of the fiscal period, all revenue and expense accounts are closed to prepare for the next accounting period. The allowance for doubtful accounts and accounts receivable are not closed at the end of the fiscal period as they are balance sheet accounts that carry forward to the next period.

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3.

Which of the following journal entries is the adjusting entry to estimate bad debts for the period?
- A.
  
  Debit: Allowance for Doubtful Accounts credit: Accounts Receivable
- B.
  
  Debit: Bad Debt Expense credit: Allowance for Doubtful Accounts
- C.
  
  Debit: Bad Debt Expense credit: Accounts Receivable
- D.
  
  Debit: Allowance for Doubtful Accounts credit: Bad Debt Expense
Correct Answer
B. Debit: Bad Debt Expense credit: Allowance for Doubtful Accounts

Explanation
The adjusting entry to estimate bad debts for the period is to debit Bad Debt Expense and credit Allowance for Doubtful Accounts. This entry recognizes the expense of estimated bad debts and reduces the value of the Allowance for Doubtful Accounts, which is a contra-asset account used to offset the Accounts Receivable. By debiting Bad Debt Expense, the company acknowledges that some of its accounts receivable may not be collectible and needs to be accounted for as an expense. By crediting Allowance for Doubtful Accounts, the company increases the allowance to cover potential bad debts.

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4.

Which of the following journal entries is the transaction to write off a customer's account?
- A.
  
  Debit: Allowance for Doubtful Accounts credit: Accounts Receivable
- B.
  
  Debit: Bad Debt Expense credit: Allowance for Doubtful Accounts
- C.
  
  Debit: Bad Debt Expense credit: Accounts Receivable
- D.
  
  Debit: Allowance for Doubtful Accounts credit: Bad Debt Expense
Correct Answer
A. Debit: Allowance for Doubtful Accounts credit: Accounts Receivable

Explanation
This journal entry is the transaction to write off a customer's account because it decreases the Accounts Receivable (credit) and increases the Allowance for Doubtful Accounts (debit). By debiting the Allowance for Doubtful Accounts, the company is recognizing that the customer's account is unlikely to be collected and is reducing the amount of Accounts Receivable accordingly.

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5.

Which of the following can be found on the balance sheet?
- A.
  
  Accounts Receivable
- B.
  
  Allowance for Doubtful Accounts
- C.
  
  Net Accounts Receivable
- D.
  
  All of the Above
Correct Answer
D. All of the Above

Explanation
All of the items mentioned can be found on the balance sheet. Accounts Receivable represents the amount of money owed to a company by its customers for goods or services provided. Allowance for Doubtful Accounts is a contra-asset account that represents the estimated amount of accounts receivable that may not be collected. Net Accounts Receivable is the difference between Accounts Receivable and the Allowance for Doubtful Accounts, representing the amount expected to be collected. Therefore, all three items are important components of a company's balance sheet.

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6.

If, before you adjust for bad debts, the Allowance for Doubtful Accounts account has a debit balance, how did this happen?
- A.
  
  Your estimate for bad debts at the end of last year was too high.
- B.
  
  During the year, you collected payment from lots of people whose accounts you had previously written off.
- C.
  
  This years credit sales were higher than expected.
- D.
  
  Your write-offs during the year were higher than expected.
Correct Answer
D. Your write-offs during the year were higher than expected.

Explanation
If the Allowance for Doubtful Accounts account has a debit balance before adjusting for bad debts, it means that the company has written off more accounts during the year than originally anticipated. A debit balance in the allowance account indicates that more bad debts have been recognized and written off, reducing the accounts receivable balance. This could be due to customers defaulting on their payments or being unable to fulfill their obligations, resulting in higher write-offs than expected.

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7.

Compared to accounts receivable, notes receivable are generally ...
- A.
  
  Longer term
- B.
  
  Interest bearing
- C.
  
  Both of the above
- D.
  
  None of the above
Correct Answer
C. Both of the above

Explanation
Notes receivable are generally longer term compared to accounts receivable. This means that notes receivable have a longer repayment period than accounts receivable. Additionally, notes receivable are also interest-bearing, meaning that the borrower is required to pay interest on the amount borrowed. Therefore, both statements are correct.

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8.

If you are debiting Notes Receivable, what could you credit?
- A.
  
  Accounts receivable
- B.
  
  Cash
- C.
  
  Sales
- D.
  
  Any of the above are possible
Correct Answer
D. Any of the above are possible

Explanation
When debiting Notes Receivable, you could credit any of the options mentioned: accounts receivable, cash, or sales. This is because Notes Receivable represents a promissory note or a written promise to receive payment from a customer. When you debit Notes Receivable, it means you are decreasing the amount owed to you by the customer. To balance the accounting equation, you need to credit an account, and any of the options mentioned can be used depending on the specific transaction and circumstances.

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9.

If a customer pays with his or her debit card, which account should the store debit?
- A.
  
  Cash
- B.
  
  Accounts receivable
- C.
  
  Notes receivable
- D.
  
  Bad debt expense
Correct Answer
A. Cash

Explanation
When a customer pays with their debit card, the store should debit the cash account. This is because the payment is made directly from the customer's bank account, and the store receives immediate access to the funds. By debiting the cash account, the store accurately reflects the increase in cash on their financial statements.

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10.

The journal entry "debit interest receivable, credit interest revenue" is made under which circumstance?
- A.
  
  The company receives an interest payment on a note receivable
- B.
  
  The company accrues interest because it has a note receivable whose term crosses a fiscal period end
- C.
  
  The company issues a note receivable
- D.
  
  The company collects repayment of a note receivable
Correct Answer
B. The company accrues interest because it has a note receivable whose term crosses a fiscal period end

Explanation
The journal entry "debit interest receivable, credit interest revenue" is made when the company accrues interest because it has a note receivable whose term crosses a fiscal period end. This means that the company has earned interest income from a note receivable that is not yet due for repayment. By recording this journal entry, the company recognizes the interest revenue as it becomes earned and increases the interest receivable account to reflect the amount owed by the debtor.

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Current Version
Mar 20, 2023

Quiz Edited by
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Dec 03, 2015

Quiz Created by
Jan Morrison

12 Accounting - December 3, 2015

What type of account is Allowance for Doubtful Accounts?

Which of the following accounts gets closed at the end of the fiscal period?

Which of the following journal entries is the adjusting entry to estimate bad debts for the period?

Which of the following journal entries is the transaction to write off a customer's account?

Which of the following can be found on the balance sheet?

If, before you adjust for bad debts, the Allowance for Doubtful Accounts account has a debit balance, how did this happen?

Compared to accounts receivable, notes receivable are generally ...

If you are debiting Notes Receivable, what could you credit?

If a customer pays with his or her debit card, which account should the store debit?

The journal entry "debit interest receivable, credit interest revenue" is made under which circumstance?