Accounts Receivable and Credit Transactions

Accounts Receivable and Credit Transactions

Assessment

Interactive Video

Business

10th - 12th Grade

Easy

Created by

Jackson Turner

Used 1+ times

FREE Resource

The video tutorial covers the fundamentals of accounting, focusing on the balance sheet and accounts receivable. It explains the role of accounts receivable in liquidity, the valuation process, and associated risks like bad debt. Practical examples illustrate how businesses manage accounts receivable, including credit sales and installment payments. The tutorial also differentiates between sales on credit cards and installment sales, and guides on recording journal entries and understanding financial statements.

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10 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the primary purpose of a balance sheet?

To show the company's revenue and expenses

To display the company's assets, liabilities, and equity

To list all the company's transactions

To provide a summary of the company's cash flow

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Why must revenue be recognized when it is earned, even if cash has not been collected?

To avoid paying taxes

Due to accrual-based accounting and GAAP

Because of cash-based accounting

To simplify financial statements

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What happens when a company collects cash from an accounts receivable?

Debit cash and credit accounts receivable

Debit cash and credit sales

Debit accounts receivable and credit cash

Debit sales and credit cash

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is a bad debt reserve?

A reserve for employee bonuses

An expense account for uncollectible accounts receivable

A fund set aside for future investments

A savings account for the company

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Why might a company have a receivable specialist?

To manage inventory

To oversee employee payroll

To track customer payments and handle debt collections

To manage company investments

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How is accounts receivable different from notes receivable?

Accounts receivable is tied to a sale, while notes receivable is a loan

Accounts receivable is for short-term loans, while notes receivable is for long-term loans

Notes receivable is tied to a sale, while accounts receivable is a loan

Both are the same and used interchangeably

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Why do businesses often sell on credit?

To increase their cash flow

To be competitive and meet customer preferences

To avoid paying taxes

To reduce their inventory

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