Which of the following is correct when bad debt expense is recorded at year-end?

Income from operations will decrease.

Current liabilities will decrease.

Which of the following statements is false?

The journal entry to record bad debt expense decreases current assets.

The journal entry to record bad debt expense decreases retained earnings.

The journal entry to write off an uncollectible account receivable decreases operating income.

The journal entry to write off an uncollectible account receivable does not affect current assets.

Which of the following journal entries correctly records bad debt expense?

Bad debt expense xxx Allowance for doubtful accounts xxx

Bad debt expense xxx Accounts receivable xxx

Allowance for doubtful accounts xxx Accounts receivable xxx

Allowance for doubtful accounts xxx Bad debt expense xxx

Which of the following journal entries correctly records the write off of an uncollectible account receivable when using the allowance method?

Allowance for doubtful accounts xxx Accounts receivable xxx

Bad debt expense xxx Uncollectible sales xxx

Allowance for doubtful accounts xxx Bad debt expense xxx

Bad debt expense xxx Allowance for doubtful accounts xxx

Which of the following statements is correct?

The journal entry to record bad debt expense requires a debit to bad debt expense and a credit to allowance for doubtful accounts.

The journal entry to record bad debt expense requires a debit to bad debt expense and a credit to accounts receivable.

The journal entry to record the write off of an uncollectible account receivable requires a debit to bad debt expense and a credit to accounts receivable.

The journal entry to record the write off of an uncollectible account receivable requires a debit to bad debt expense and a credit to allowance for doubtful accounts.

What would be incorrect about reporting accounts receivable in the balance sheet?

Presenting accounts receivable less bad debt expense and write-offs.

Presenting accounts receivable net of allowance for doubtful accounts.

Presenting accounts receivable at estimated net realizable value.

Presenting accounts receivable at gross amount, less allowance for doubtful accounts.

Which of the following statements correctly describes the effect of recording the collection of a $10,000 account receivable for which a 2% sales discount was recorded at the time of collection?

Current assets will remain the same.

Gross profit will decrease $200.

Accounts receivable will decrease $9,800.

Net sales will increase $9,800.

Which of the following journal entries correctly records the collection of an account receivable for which a 1% sales discount was recorded at the time of collection?

Cash xxx Sales discounts xxx Accounts receivable xxx

Cash xxx Bad debt expense xxx Accounts receivable xxx

Cash xxx Sales discounts xxx Accounts receivable xxx

Cash xxx Gross profit xxx Accounts receivable xxx

Which of the following correctly describes the effect of a journal entry involving the recording of a sales return?

Current assets remain the same.

Which of the following correctly describes the effect of a sales discount?

Current assets remain the same.

Which of the following does not correctly describe the effect of a credit card discount?

Neither operating expenses nor net income is affected.

Net sales decrease and gross profit decreases.

Net sales decrease and net income decreases.

Operating expenses remain the same and net income decreases.

Which of the following does not correctly describe the effect of a journal entry involving the recording of a credit card discount?

Net sales decrease, operating expenses increase, and net income remains the same.

Net sales decrease and net income decreases.

Operating expenses remain the same and net income decreases.

Net sales decrease and gross profit decreases.

Which of the following correctly describes credit terms of 2/10, n/30?

B) A two percent discount for early payment is available if the invoice is paid within ten days of the date of sale.

A) A two percent discount for early payment is available if the invoice is paid before the tenth day of the month following the month the sale.

C) A ten percent discount for early payment is available if the invoice is paid within two days of the date of the invoice.

D) A two percent discount for early payment is available if the invoice is paid after the tenth day, but before the thirtieth day of the invoice date.

When a credit sale is made with terms of 2/10, n/30 on May 10 and the customer's check is received on May 19, which of the following is true about the May 19 journal entry?

The debit to cash will be less than the credit to accounts receivable on May 19.

The debit to cash will equal the credit to accounts receivable because the discount was recorded on May 10.

There will be a debit to sales discounts on May 10.

There will be a credit to sales discounts on May 19.

Which of the following accounts is not a contra-revenue account?

Allowance for doubtful accounts

Dillon Company uses the allowance method to account for bad debts. The entry to write off a bad account (one that will never be collected) should be:

Debit: Allowance for doubtful accounts | Credit: Accounts receivable

Debit: Bad debt expense | Credit: Accounts receivable

Debit: Bad debt expense | Credit: Allowance for doubtful accounts

Debit: Sales revenue | Credit: Accounts receivable

When using the allowance method for accounting for bad debts, accounts receivable is reported on the balance sheet at the expected net realizable value. When a particular receivable from a customer ultimately is determined to be uncollectible and is written off, the recording of this event will:

Have no effect on the net realizable value of the accounts receivable.

Decrease the net realizable value of the accounts receivable.

Have an effect that is not determinable from the information given.

Increase the net realizable value of the accounts receivable.

Oakwood Company had accounts receivable of $$750,000 and an allowance for doubtful accounts of $$ 21,500 just prior to writing off as worthless a customer's $5,000 account receivable. The net realizable value of Oakwood's accounts receivable as shown by the accounting records before and after the write off was as follows:

Before: $$728,500 | After: $$ 728,500

Before: $$750,000 | After: $$ 745,000

Before: $$721,500 | After: $$ 733,500

Before: $$728,500 | After: $$ 723,500

Woodland Company uses the allowance method to account for bad debts. During the current year, a customer declared bankruptcy and a receivable of $10,000 was deemed uncollectible. Which of the following journal entries records Woodland's uncollectible account write-off?

Allowance for doubtful accounts 10,000 Accounts receivable 10,000

Bad debt expense 10,000 Allowance for doubtful accounts 10,000

Allowance for doubtful accounts 10,000 Bad debt expense 10,000

Loss on receivables 10,000 Accounts receivable 10,000

Which of the following statements does not correctly describe the allowance for doubtful accounts balance?

It is reported on the balance sheet as a component of stockholders' equity.

It is reported on the balance sheet as a component of current assets.

It is created as a result of the adjusting entry to record bad debt expense.

Which of the following statements pertaining to bank reconciliations is false?

Bank service charges are deducted from the bank cash balance.

Outstanding checks are deducted from the bank cash balance.

Deposits in transit are added to the bank cash balance.

Non-sufficient funds checks identified in the bank statement are deducted from the book cash balance.

When a depositor receives a bank statement indicating that there was a "NSF check," the depositor should do which of the following?

Reduce the cash account per the books for the amount of the "NSF check."

Reduce the cash account per the bank statement for the amount of the "NSF check."

Debit allowance for doubtful accounts for the amount of the check.

Increase the sales returns and allowances account.

A deposit in transit in a bank reconciliation should be:

Added to the bank statement balance.

Added to the depositor's book cash balance.

Subtracted to the depositor's book cash balance.

Subtracted from the bank statement balance.

Which of the following demonstrates a poor internal control procedure?

The bookkeeper makes cash deposits and records journal entries related to cash, while the treasurer prepares the bank reconciliation.

The president, who does no bookkeeping, prepares the bank reconciliation each month.

The treasurer signs all checks after the bookkeeper prepares the supporting documents.

One bookkeeper prepares cash deposits and the other bookkeeper enters the collections in the journal and ledger.

FinAcc Chap 6

Quiz

•

Business

•

University

•

Practice Problem

•

Hard

Quy Hồ

FREE Resource

Student preview

100 questions

Show all answers

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following would be included in Latimer Company's sales in 2019?

Goods shipped from a supplier in 2019 with terms of FOB shipping point. Latimer received the goods in 2019.

Goods shipped to customers in 2019 with terms of FOB destination. The customer received the goods in 2020.

Goods shipped to customers in 2018 with terms of FOB destination. The customer received the goods in 2019.

Goods shipped to customers in 2018 with terms of FOB shipping point. The customer received the goods in 2019.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A company sells a product FOB destination. The product is shipped on December 29, 2018 and the customer receives the shipment on January 3, 2019. Which of the following is true?

The sale will be recorded when the customer's credit card information is received.

The sale will be recorded when the shipment is received by the customer.

The sale will be recorded when the shipment is shipped.

The sale will be recorded when it is known there will be no returns or allowances.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is not a reason for the Jones Hardware Store to accept credit cards from customers?

Jones can receive its money faster than if it directly extended credit to the customer by an account receivable.

The credit card company offers a discount to Jones so that Jones will have more money available for operations.

Jones will not have to be concerned with nonsufficient funds checks from customers.

Jones will not have to have extra office workers to make phone calls to customers requesting collections on accounts.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

$1,634,000.

$1,800,000.

$1,667,000.

$1,745,000.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Newark Company has provided the following information: • Cash sales, $450,000 • Credit sales, $1,350,000 • Selling and administrative expenses, $330,000 • Sales returns and allowances, $90,000 • Gross profit, $1,360,000 • Increase in accounts receivable, $55,000 • Bad debt expense, $33,000 • Sales discounts, $43,000 • Net income, $1,030,000 How much is Newark's cost of sales?

$307,000.

$252,000.

$440,000.

$340,000.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Newark Company has provided the following information: • Cash sales, $450,000 • Credit sales, $1,350,000 • Selling and administrative expenses, $330,000 • Sales returns and allowances, $90,000 • Gross profit, $1,360,000 • Increase in accounts receivable, $55,000 • Bad debt expense, $33,000 • Sales discounts, $43,000 • Net income, $1,030,000 How much cash was collected from customers?

Cash flow increased $1,295,000.

Cash flow increased $1,612,000.

Cash flow decreased $1,855,000.

Cash flow increased $1,405,000.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

$5,500.

$6,700.

$4,240.

$4,300.

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100 questions

Which of the following would be included in Latimer Company's sales in 2019?

A company sells a product FOB destination. The product is shipped on December 29, 2018 and the customer receives the shipment on January 3, 2019. Which of the following is true?

Which of the following is not a reason for the Jones Hardware Store to accept credit cards from customers?

Flyer estimates bad debt expense assuming that 1.5% of credit sales have historically been uncollectible. What is the balance in the allowance for doubtful accounts after bad debt expense is recorded?

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