TOPIC 7 : ACCOUNTING FOR RECEIVABLES

TOPIC 7 : ACCOUNTING FOR RECEIVABLES

read the slide carefully before proceed to answer the next questions.

Multiple Choice

When a sale is made with the credit terms of 3/15, n/60, the "60" refers to what period?

• discount

• trade

• special

• credit

Multiple Choice

When a sale is made with the credit terms of 3/15, n/60, the "15" refers to what period?

• discount

• trade

• special

• credit

Multiple Choice

When a sale is made with the credit terms of 3/15, n/60, the "3" refers to

• discount

• trade

• special

• credit

Multiple Choice

On June 1, RM900 of goods are sold with credit terms of 2/10, n/30. How much should the seller expect to receive if the buyer pays on June 8?

• 898

• 882

• 892

• 900

Multiple Choice

Which of the following statements is TRUE about bad debts?

• it has a debit balance

• it is the same as the Provision for bad debts

• it is entered in the Financial Position

• it has a credit balance

read the slides before answers the next questions

Multiple Choice

Accounts Receivable is a current asset. Under which classification is Allowance for Doubtful Debts?

• A contra account to Accounts Receivable

• Operational Expenses

• Other Expenses

• A contra account to Sales

Fill in the Blanks

Net Realizable Value = ? - ? (fill in the blanks with a proper accounts name)

Multiple Choice

Accounts Receivable = RM15,000

Allowance for Doubtful Debts = RM2,500

How much is the net realizable value of the Accounts Receivable?

• RM15,000

• RM13,500

• RM12,500

• RM2,500

read the slide carefully before proceed to answers next questions

Multiple Choice

What effect does bad debts have on debtors?

• it increases debtors

• it decreases debtors

• it has no effect on debtors

• none of the above

Multiple Choice

The loss from an uncollectible amount is a regular expense of doing business.

• False

• True

Multiple Choice

Accounts receivable that cannot be collected are called uncollectible accounts.

• False

• True

Fill in the Blanks

State one causes of bad debts :

Multiple Choice

Account classification for bad debt is a (n) ___________

• Asset

• Liability

• Revenue

• Expense

Multiple Select

Two basis for estimating uncollectible accounts are:

• percentage on current assets

• percentage on sales.

• percentage on account receivables

• percentage on net credit sales

Fill in the Blanks

State one method accounting for bad debts

Multiple Choice

Company make an allowance for doubtful debts in direct write-off method.

• True

• False

Multiple Choice

Allowance method is a method of accounting for bad debts that involves making provision or estimation of the uncollectible debts at the end of the accounting period.

• True

• False

Multiple Choice

Allowance method does not comply to Expense Recognition Concept?

• True

• False

Multiple Choice

% of provision X net credit sales = ?

• beginning balance of Bad Debt Expense

• beginning balance of Allowance for Doubtful Debts

• Bad Debt Expense

• ending balance of Allowance for Doubtful Debts

Multiple Choice

% of provision X ending balance of Accounts Receivable = ?

• beginning balance of Bad Debt Expense

• beginning balance of Allowance for Doubtful Debts

• Bad Debt Expense

• ending balance of Allowance for Doubtful Debts

Multiple Choice

The account allowance for doubtful debts is increased by a debit.

• True

• False

Multiple Choice

An increase in the allowance for doubtful debts would result in _______________.

• an increase in revenue

• an increase in expenses

• a decrease in revenue

• a decrease in expenses

Multiple Choice

When do bad debts recognised?

• At the end of the financial year
• At the end of month
• When they occur
• At the end of the quarter

Multiple Choice

Under the direct write-off method of accounting for uncollectible accounts, 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.

Multiple Select

When an account becomes uncollectible and must be written off using direct write-off method, journal entry will be

• debit Bad Debt Expense

• credit Allowance for Doubtful debts

• debit Accounts Receivables

• credit Accounts Receivable

• debit Allowance for doubtful debts

Multiple Select

When an account becomes uncollectible and must be written off using allowance method, journal entry will be

• debit Bad Debt Expense

• credit Allowance for Doubtful debts

• debit Accounts Receivables

• credit Accounts Receivable

• debit Allowance for doubtful debts

Multiple Choice

When a previously written-off account is collected, Accounts Recevable is debited AND credited.

• False

• True

Multiple Select

When recorded bad debts recovery using allowance method, journal entry will be

• debit Accounts Receivable; credit bad debts recovered

• debit Accounts Receivable; credit Allowance for Doubtful debts

• debit Accounts Receivables; credit Cash

• debit cash; credit Accounts Receivable

• debit Allowance for doubtful debts; credit Accounts Receivables

Multiple Select

When recorded bad debts recovery using direct write-off method, journal entry will be

• debit Accounts Receivable; credit bad debts recovered

• debit Accounts Receivable credit Allowance for Doubtful debts

• debit Accounts Receivables; credit Cash

• debit cash; credit Accounts Receivable

• debit Allowance for doubtful debts; credit Accounts Receivables

Multiple Choice

Which is the correct general journal entry to record the cash collected from the debtors?

• dr Accounts Receivable

  cr Cash

• dr Cash

  cr Accounts Receivable

• dr Accounts Receivable

  cr Sales

• dr Sales

  cr Accounts Receivable