ACCY 111 Chapter 7 Part 2

26 Questions | By Mehleezah | Updated: Mar 20, 2022 | Attempts: 64

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CHoose the best word for each definition

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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