Have an account?
Skip to Content
Build your own quiz
Suggestions for you
Business, Professional Development, Education
1st -
University
QUIZ 2 : TOPIC 7 [ACCOUNTING FOR RECEIVABLES]
31 questions
Show Answers
See Preview
- 1. Multiple Choice
When a sale is made with the credit terms of 2/10, n/30, the "10" refers to what period?
discount
trade
special
tax
- 2. Multiple Choice
On June 1, RM800 of goods are sold with credit terms of 1/10, n/30. How much should the seller expect to receive if the buyer pays on June 8?
720
784
792
800
- 3. Multiple Choice
On June 1,RM800 of goods are sold with credit terms of 1/10, n/30. On June 3 the customer returned RM100 of the goods. How much should the seller expect to receive if the buyer pays on June 8.
692
693
700
792
- 4. Multiple Choice
When the Allowance for Doubtful Debts Accounts appears on a company's financial statements, its balance will be a __________ balance.
debit
credit
- 5. Multiple Choice
On which financial statement would you expect to find Allowance for Doubtful Debts Accounts?
Statement of Financial Position
Statement of Profit or Loss
Statement of Cash Flow
Statement of Owner's Equity
- 6. Multiple Choice
Which method of reporting losses on accounts receivable is to be used for financial reporting?
allowance
direct write-off
- 7. Multiple Choice
After several years of operations, a company's Bad Debts Expense for a given year is likely to be the same as its balance in Allowance for Doubtful Debts Accounts.
True
False
- 8. Multiple Choice
A company estimates that RM20,000 of its RM500,000 of account receivable will be uncollectible. Its Allowance for Doubtful Debts Accounts presently has a credit balance of RM8,000. The adjusting entry will include a _____________ to the Allowance for Doubtful Debts Accounts.
debit of RM12,000
credit of RM12,000
debit of RM28,000
credit of RM28,000
- 9. Multiple Choice
A company estimates that RM20,000 of its RM500,000 of accounts receivable will be uncollectible. Its Allowance for Doubtful Debts Accounts presently has a credit balance of RM7,000, bad debts written-off RM10,000. The adjusting entry will include a ____________ to Allowance for Doubtful Debts Accounts.
debit of RM13000
credit of RM13000
debit of RM23,000
credit of RM23,000
- 10. Multiple Choice
The loss from an uncollectible amount is a regular expense of doing business.
False
True
- 11. Multiple Choice
The Allowance for Doubtful Debts Accounts is increased by a debit.
True
False
- 12. Multiple Choice
A business generally sells on account to encourage sales.
False
True
- 13. Multiple Choice
The amount of accounts receivable that is uncollectible is an expense.
False
True
- 14. Multiple Choice
Allowance for Doubtful Debts Accounts is a contra account to its related asset account, Account Receivables.
False
True
- 15. Multiple Choice
Trade accounts receivable are valued and reported on the Statement of Financial Position.
in the investment section.
at gross amounts less sales returns and allowances.
at net realizable value.
only if they are not past due.
- 16. Multiple Choice
Under the allowance method, writing off an uncollectible account
affects only Statement of Financial Position accounts.
affects both Statement of Financial Position and income statement accounts.
affects only income statement accounts.
is not acceptable practice.
- 17. Multiple Choice
The collection of an account that had been previously written off under the allowance method of accounting for bad debts
will increase income in the period it is collected.
will decrease income in the period it is collected.
requires a correcting entry for the period in which the account was written off.
does not affect income in the period it is collected.
- 18. Multiple Choice
An aging of a company's accounts receivable indicates that RM8,000 are estimated to be uncollectible. If Allowance for Doubtful Debts Accounts has a RM1,100 credit balance, the
adjustment to record bad debts for the period will require a
debit to Bad Debts Expense for RM8,000.
debit to Allowance for Doubtful Accounts for RM6,900.
debit to Bad Debts Expense for RM6,900.
credit to Allowance for Doubtful Debts Accounts for RM8,000.
- 19. Multiple Choice
A reasonable amount of uncollectible accounts is evidence
that the credit policy is too strict
that the credit policy is too lenient.
of a sound credit policy.
of poor judgments on the part of the credit manager.
- 20. Multiple Choice
To record estimated uncollectible accounts using the allowance method, the adjusting entry would be a
debit to Accounts Receivable and a credit to Allowance for Doubtful Debts Accounts.
debit to Bad Debts Expense and a credit to Allowance for Doubtful Debts Accounts.
debit to Allowance for Doubtful Debts Accounts and a credit to Accounts Receivable.
debit to Loss on Credit Sales and a credit to Accounts Receivable.
- 21. Multiple Choice
Dayang Company uses the percentage of net credit sales method for recording bad debts expense. For the year, cash sales are RM500,000 and credit sales are RM2,000,000. Management estimates that 2% of the net credit sales is uncollectible. What adjusting entry will Dayang Company make to record the bad debts expense?
Dr. Bad Debts Expense RM50,000;
Cr. Allowance for Doubtful Debts Accounts RM50,000
Dr. Bad Debts Expense RM40,000;
Cr. Allowance for Doubtful Debts Accounts RM40,000
Dr. Bad Debts Expense RM40,000;
Cr. Accounts Receivable RM40,000
Dr. Bad Debts Expense RM50,000;
Cr. Accounts Receivable RM50,000
- 22. Multiple Choice
The direct write-off method of accounting for bad debts
uses an allowance account.
uses a contra-asset account.
does not require estimates of bad debt expenses.
is the preferred method under generally accepted accounting principles.
- 23. Multiple Choice
When the allowance method is used to account for uncollectible accounts, Bad Debt Expense is debited when
a sale is made.
an account becomes bad debts and written off.
management estimates the amount of uncollectibles.
a customer's account becomes past-due.
- 24. Multiple Choice
When an account becomes uncollectible and must be written off,
Bad Debt Expense should be credited.
Allowance for Doubtful Debts Accounts should be credited.
Sales Revenue should be debited.
Accounts Receivable should be credited.
- 25. Multiple Choice
Under the direct write-off method of accounting for bad debts, Bad Debt Expense is debited
when a credit sale is past due.
when an account is determined to be uncollectible.
at the end of each accounting period.
whenever a pre-determined amount of credit sales have been made.
- 26. Multiple Choice
Two methods of accounting for bad debts are the
allowance method and the accrual method.
direct write-off method and the accrual method.
direct write-off method and the allowance method.
allowance method and the net realizable method.
- 27. Multiple Choice
To record estimated uncollectible accounts using the allowance method, the adjusting entry would be a
debit to Accounts Receivable and a credit to Allowance for Doubtful Debts Accounts.
debit to Bad Debt Expense and a credit to Allowance for Doubtful Debts Accounts.
debit to Allowance for Doubtful Debts Accounts and a credit to Accounts Receivable.
debit to Loss on Credit Sales Revenue and a credit to Accounts Receivable.
- 28. Multiple Choice
Two basis for estimating uncollectible accounts are:
percentage of current assets and percentage of net credit sales.
percentage of assets and percentage of net credit sales.
percentage of accounts receivables and percentage of net credit sales.
percentage of accounts receivables and percentage of total revenue.
- 29. Multiple Choice
Valli Company uses the percentage of net credit sales method for recording bad debts expense. For the year, cash sales are RM700,000 and credit sales are RM2,500,000. Management estimates that 1% of net credit sales is uncollectibles. What adjusting entry will Valli Company make to record the bad debts expense?
Bad Debt Expense 32,000
Allowance for Doubtful Debts Accounts 32,000
Bad Debt Expense 25,000
Accounts Receivable 25,000
Bad Debt Expense 25,000
Allowance for Doubtful Debts Accounts 25,000
Bad Debt Expense 32,000
Accounts Receivable 32,000
- 30. Multiple Choice
Using the percentage of accounts receivables method for recording bad debt expense, estimated uncollectible accounts are RM12,000. If the balance of the Allowance for Doubtful Accounts is RM2,500 credit before adjustment, what is the amount of bad debt expense for that period?
RM2,500
RM9,500
RM12,000
RM14,500
- 31. Multiple Choice
Using the percentage of accounts receivables basis, the uncollectible accounts is estimated to be RM33,000. If the balance for the Allowance for Doubtful Debts Accounts is a RM5,000 credit before adjustment, bad debts recovery RM7,000. what is the amount of bad debt expense for the period?
RM5,000
RM28,000
RM33,000
RM21,000
- Answer choicesTagsAnswer choicesTags