ACCY 111 Chapter 7 Part 2

26 Questions | Total Attempts: 37

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ACCY 111 Chapter 7 Part 2

CHoose the best word for each definition


Questions and Answers
  • 1. 
    Is of vital importance for good internal control. 
    • A. 

      Internal control

    • B. 

      Write-off of accounts receivable

    • C. 

      Sales returns

    • D. 

      Separation of duties

  • 2. 
    Has no effect on net receivables when using the allowance method. 
    • A. 

      Internal control

    • B. 

      Write-off of accounts receivable

    • C. 

      Sales returns

    • D. 

      Separation of duties

  • 3. 
    Is a contra revenue account.
    • A. 

      Internal control

    • B. 

      Write-off of accounts receivable

    • C. 

      Sales returns

    • D. 

      Separation of duties

  • 4. 
    Indirectly determines bad debt expense by estimating realizable value.
    • A. 

      Accounts receivable

    • B. 

      Balance sheet approach

    • C. 

      Income statement approach

    • D. 

      Direct write-off method

  • 5. 
    Are reported at their net realizable value.
    • A. 

      Accounts receivable

    • B. 

      Balance sheet approach

    • C. 

      Income statement approach

    • D. 

      Direct write-off method

  • 6. 
    The risk of uncollectibility is retained by the seller. 
    • A. 

      Direct write-off method

    • B. 

      Factoring with recourse

    • C. 

      Interest-bearing note

    • D. 

      Internal control

  • 7. 
    Recognizes bad debts when accounts become uncollectible. 
    • A. 

      Income statement approach

    • B. 

      Direct write-off method

    • C. 

      Factoring with recourse

    • D. 

      Interest-bearing note

  • 8. 
    Includes separation of duties. 
    • A. 

      Factoring with recourse

    • B. 

      Interest-bearing note

    • C. 

      Internal control

    • D. 

      Receivables written off

  • 9. 
    Receivables used as collateral for debt. 
    • A. 

      Allowance method

    • B. 

      Pledging of accounts receivable

    • C. 

      Average collection period

    • D. 

      Compensating balance

  • 10. 
    The sale of accounts receivable to a financial institution.  
    • A. 

      Factoring

    • B. 

      Net method

    • C. 

      Noninterest-bearing note

    • D. 

      Cash discounts

  • 11. 
    Cash discount not taken is interest revenue.
    • A. 

      Factoring

    • B. 

      Net method

    • C. 

      Noninterest-bearing note

    • D. 

      Cash discounts

  • 12. 
    Deducted from list price
    • A. 

      Net method

    • B. 

      Noninterest-bearing note

    • C. 

      Cash discounts

    • D. 

      Trade discounts

  • 13. 
    Average number of days that accounts receivable are outstanding. 
    • A. 

      Assigning of receivables

    • B. 

      Average collection period

    • C. 

      Compensating balance

    • D. 

      Discounting

  • 14. 
    The sale of accounts receivable to a financial institution.  
    • A. 

      Discounting

    • B. 

      Factoring

    • C. 

      Net method

    • D. 

      Noninterest-bearing note

  • 15. 
    The sale of a note receivable to a lender. 
    • A. 

      Compensating balance

    • B. 

      Discounting

    • C. 

      Factoring

    • D. 

      Net method

  • 16. 
    An example of a restriction on cash.
    • A. 

      Assigning of receivables

    • B. 

      Average collection period

    • C. 

      Compensating balance

    • D. 

      Discounting

  • 17. 
    Bad debt expense determined by estimating net realizable value. 
    • A. 

      Balance sheet approach

    • B. 

      Accounts receivable aging schedule

    • C. 

      Cash discount

    • D. 

      Sales returns

  • 18. 
    Accounts receivable aging schedule Grouping accounts receivable depending on the length of time outstanding.
    • A. 

      Balance sheet approach

    • B. 

      Accounts receivable aging schedule

    • C. 

      Cash discount

    • D. 

      Sales returns

  • 19. 
    Reduces the amount paid by a credit customer if paid within a specified time
    • A. 

      Compensating balance

    • B. 

      Sales returns

    • C. 

      Balance sheet approach

    • D. 

      Cash discount

  • 20. 
    When merchandise is returned for credit. 
    • A. 

      Sales returns

    • B. 

      Cash discount

    • C. 

      Without recourse

    • D. 

      Pledging

  • 21. 
    An example of a restriction on cash.
    • A. 

      Sales returns

    • B. 

      Income statement approach

    • C. 

      Direct write-off method

    • D. 

      Compensating balance

  • 22. 
    Buyer assumes the risk of uncollectibility. 
    • A. 

      Direct write-off method

    • B. 

      Without recourse

    • C. 

      Cash discount

    • D. 

      Pledging

  • 23. 
    Bad debt expense is recorded when receivables are written off.  
    • A. 

      Direct write-off method

    • B. 

      Sales returns

    • C. 

      Without recourse

    • D. 

      Pledging

  • 24. 
    Bad debt expense a % of credit sales.  
    • A. 

      Direct write-off method

    • B. 

      Income statement approach

    • C. 

      Pledging

    • D. 

      Allowance method

  • 25. 
    Using receivables as collateral for a loan.
    • A. 

      Direct write-off method

    • B. 

      Pledging

    • C. 

      Allowance method

    • D. 

      Income statement approach

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