Accounts Receivables MCQs

?

An analysis of an entitys $150,000 accounts receivable at year end resulted in a $5,000 ending balance for its allowance for uncollectible accounts ...






?

The following information applies to Nichola Manufacturing Company, which has a 6-month operating cycle: Cash sales ......................$100,000 ...






?

Johnson Company uses the allowance method to account for uncollectible accounts receivable. After recording the estimate of uncollectible accounts ex...






?

Based on the industry average, Davis Corporation estimates that its bad debts should average 3% of credit sales. The balance in the allowance for unc...






?

The following information has been compiled by Able Manufacturing Company: ? Sale of company products for the period to customers with net 30-day ter...






?

Marr Co. had the following sales and accounts receivable balances, prior to any adjustments at year end: Credit sales .................................






?

When the allowance method of recognizing uncollectible accounts is used, the entry to record the write-off of a specific account






?

Wren Company had the following account balances at December 31: Accounts receivable.......................... $ 900,000 Allowance for uncollectible ...






?

On March 31, Vale Co. had an unadjusted credit balance of $1,000 in its allowance for uncollectible accounts. An analysis of Vales trade accounts re...






?

Which method of recording uncollectible accounts expense is consistent with accrual accounting? Allowance ...Direct Write-Off






?

Under the allowance method of recognizing uncollectible accounts, the entry to write-off an uncollectible account






?

The following accounts were abstracted from Roxy Co.s unadjusted trial balance at December 31: .......................................Debit ..........






?

A change in credit policy has caused an increase in sales, an increase in discounts taken, a reduction in the investment in accounts receivable, and a...






?

A change in credit policy has caused an increase in sales, an increase in discounts taken, a decrease in the amount of bad debts, and a decrease in th...






?

The average collection period for a firm measures the number of days






?

Which of the following represents a firm’s average gross receivables balance? I. Days’ sales in receivables x accounts receivable turnover. II. ...






?

An aging of accounts receivable measures the






?

When a company analyzes credit applicants and increases the quality of the accounts rejected, the company is attempting to






?

An increase in sales resulting from an increased cash discount for prompt payment would be expected to cause






?

An organization would usually offer credit terms of 2/10, net 30 when






?

Which one of the following statements is most likely to be true if a seller extends credit to a purchaser for a period of time longer than the purchas...






?

The one item listed below that would warrant the least amount of consideration in credit and collection policy decisions is the






?

Jackson Distributors sells to retail stores on credit terms of 2/10, net 30. Daily sales average 150 units at a price of $300 each. All sales are on c...






?

A firm averages $4,000 in sales per day and is paid, on an average, within 30 days of the sale. After they receive their invoice, 55% of the customers...






?

Dartmoor Companys budgeted sales for the coming year are $40,500,000, of which 80 are expected to be credit sales at terms of n/30. Dartmoor estimate...






?

A company plans to tighten its credit policy. The new policy will decrease the average number of days in collection from 75 to 50 days and will reduce...






?

Flyn Companys budgeted sales for the coming year are expected to be $50,000,000, of which 75% are expected to be credit sales at terms of n/30. Flyn ...






?

Yonder Motors sells 20,000 automobiles per year for $25,000 each. The firms average receivables are $30,000,000 and average inventory is $40,000,000....






?

Lawson Company has the opportunity to increase annual sales by $100,000 by selling to a new, riskier group of customers. Based on sales, the uncollect...






?

Parkison Company can increase annual sales by $150,000 if it sells to a new, riskier group of customers. The uncollectible accounts expense is expecte...






?

Best Computers believes that its collection costs could be reduced through modification of collection procedures. This action is expected to result in...






?

Hest Computers believes that its collection costs could be reduced through modification of collection procedures. This action is expected to result in...






?

Clauson, Inc., grants credit terms of 1/15, net 30 and projects gross credit sales for the year of $2,000,000. The credit manager estimates that 40% o...






?

Northville Products is changing its credit terms from net 30 to 2/10, net 30. The least likely effect of this change would be a(n)






?

Snug-fit, a maker of bowling gloves, is investigating the possibility of liberalizing its credit policy. Currently, payment is made on a cash-on-deliv...






?

A credit manager considering whether to grant trade credit to a new customer is most likely to place primary emphasis on






?

Computer Services is an established firm that sells computer hardware, software, and services. The firm is considering a change in its credit policy. ...






?

Locar Corporation had net sales last year of $18,600,000 (of which 20% were installment sales). It also had an average accounts receivable balance of ...






?

Powell Industries deals with customers throughout the country and is attempting to more efficiently collect its accounts receivable. A major bank has ...






?

Consider the following factors affecting a company as it is reviewing its trade credit policy. I. Operating at full capacity. II. Low cost of borrow...






?

A financial manager for a jewelry distributor is analyzing the cost of offering a cash discount to its credit policy. Currently, the firms sales term...






?

The cash manager for a large kitchen appliance retailer has been approached by a bank representative offering to set up a lock-box collection system. ...






?

Frame Co. has an 8% note receivable dated June 30, year 1, in the original amount of $150,000. Payments of $50,000 in principal plus accrued interes...






?

Fenn Stores, Inc. had sales of $1,000,000 during December, year 2. Experience has shown that merchandise equaling 7% of sales will be returned withi...






?

A method of estimating uncollectible accounts that emphasizes asset valuation rather than income measurement is the allowance method based on






?

Which method of recording uncollectible accounts expense is consistent with accrual accounting? Allowance Direct write-off






?

When the allowance method of recognizing uncollectible accounts is used, the entry to record the write-off of a specific account






?

Which of the following is a method to generate cash from accounts receivables? Assignment Factoring






?

Gar Co. factored its receivables. Control was surrendered in the transaction which was on a without recourse basis with Ross Bank. Gar received cash...






?

Taylored Corp. factored $400,000 of accounts receivable to Rich Corp. on July 1, year 2. Control was surrendered by Taylored. Rich accepted the rece...






?

Taylored Corp. factored $400,000 of accounts receivable to Rich Corp. on July 1, year 2. Control was surrendered by Taylored. Rich accepted the rece...






?

Taylored Corp. factored $400,000 of accounts receivable to Rich Corp. on July 1, year 2. Control was surrendered by Taylored. Rich accepted the rece...






?

Scarbrough Corp. factored $600,000 of accounts receivable to Duff Corp. on October 1, year 2. Control was surrendered by Scarbrough. Duff accepted t...






?

Synthia Corp. factored $750,000 of accounts receivable to Thomas Company on December 3, year 2. Control was surrendered by Synthia. Thomas accepted ...






?

Bannon Corp. transferred financial assets to Chapman, Inc. The transfer meets the conditions to be accounted for as a sale. As the transferor, Banno...






?

All but one of the following are required before a transfer of receivables can be recorded as a sale.






?

Which of the following is not an objective for each entity accounting for transfers of financial assets?






?

Which of the following is false?






?

Fusion Corporation uses the amortization method to account for its servicing assets. Which of the following statements is true?






?

The procedures followed by the firm for ensuring payment of its accounts receivables are called its






?

Effective September 1, a company initiates seasonal dating as a component of its credit policy, allowing wholesale customers to make purchases early...






?

Effective September 1, a company initiates seasonal dating as a component of its credit policy, allowing wholesale customers to make purchases early...






?

Which of the following describes a firm’s credit criteria?






?

A company plans to tighten its credit policy. The new policy will decrease the average number of days in collection from 75 to 50 days and reduce th...






?

A company plans to tighten its credit policy. The new policy will decrease the average number of days in collection from 75 to 50 days and reduce th...






?

A company enters into an agreement with a firm who will factor the companys accounts receivable. The factor agrees to buy the companys receivables...






?

A company with $4.8 million in credit sales per year plans to relax its credit standards, projecting that this will increase credit sales by $720,00...






?

Which of the following statements is (are) correct regarding debtors’ rights? I. State exemption statutes prevent all of a debtor’s personal pr...






?

Under the Federal Fair Debt Collection Practices Act, which of the following would a collection service using improper debt collection practices be ...






?

Which of the following liens generally require(s) the lienholder to give notice of legal action before selling the debtor’s property to satisfy th...






?

Which of the following prejudgment remedies would be available to a creditor when a debtor owns no real property? Writ of attachment . . . Garnishme...






?

Which of the following involve(s) a suretyship relationship? I. Transferee of a note requires transferor to obtain an accommodation endorser to guar...






?

Which of the following events will reduce a surety’s liability to the creditor?






?

Reuter Bank loaned Sabean Corporation $500,000 in writing. As part of the agreement, Reuter required that the three owners of Sabean act as sureties...






?

Belmont acts as a surety for a loan to Diablo from Chaffin. In which of the following cases would Belmont be released from liability? I. Diablo die...






?

A party contracts to guaranty the collection of the debts of another. As a result of the guaranty, which of the following statements is correct?






?

Sorus and Ace have agreed, in writing, to act as guarantors of collection on a debt owed by Pepper to Towns, Inc. The debt is evidenced by a promiss...






?

Under the law of suretyship, which are generally among the rights that the surety may use? I. Subrogation. II. Exoneration. III. Reimbursement fro...






?

Which of the following defenses would a surety be able to assert successfully to limit the surety’s liability to a creditor?






?

Which of the following events will release a noncompensated surety from liability?






?

Which of the following is not a defense that a surety may use to avoid payment of a debtor’s obligation to a creditor?






?

Which of the following acts always will result in the total release of a compensated surety?






?

Green was unable to repay a loan from State Bank when due. State refused to renew the loan unless Green provided an acceptable surety. Green asked R...






?

Wright agreed to assure King’s loan from Ace Bank. Which of the following events would release Wright from the obligation to pay the loan?






?

The sales manager at Ryan Company feels confident that if the credit policy at Ryan’s were changed, sales would increase and consequently, the compa...






?

Amicable Wireless, Inc. offers credit terms of 2/10, net 30 for its customers. Sixty percent of Amicable’s customers take the 2% discount and pay on...






?

An increase in sales collections resulting from an increased cash discount for prompt payment would be expected to cause a (n):






?

Which one of the following represents methods for converting accounts receivable to cash?