Goals Achievement: Chapter Seven
The majority of receivables are trade receivables.
true Correct or falseIncorrect
Advances to employees, and deposits with utilities are examples of:
trade receivables Incorrect or nontrade receivablesCorrect
Costs associated with the extension of credit include credit checks, collection efforts, and uncollectible accounts.
true Correct or falseIncorrect
When is a sale normally recognized if a customer uses a nonbank credit card?
at the time of sale Correct or at the time of collection from the credit card companyIncorrect
Does the allowance method or the direct write-off method achieve a better matching of revenues and expenses?
allowance Correct or direct write-offIncorrect
A separate allowance account is established under the direct write-off method.
right Incorrect or not rightCorrect
Which approach to estimating uncollectible accounts utilizes computation techniques like aging of accounts receivable or percentage of outstanding accounts receivable (in contrast to percentage of sales)?
income statement Incorrect or balance sheetCorrect
The income statement approaches to estimating uncollectible accounts result in computations that reveal the balance that should be in the Allowance for Uncollectible Accounts.
true Incorrect or falseCorrect
Under the allowance method, the write-off of an uncollectible account will result in a decrease in either income or total assets.
Under the allowance method, reinstating an account previously written off will cause an increase in the Allowance for Uncollectible Accounts.
true Correct or falseIncorrect
The numerator used in calculating the accounts receivable turnover ratio is:
total sales Incorrect or net credit salesCorrect
Notes receivable would initially be recorded at their maturity value.
true Incorrect or falseCorrect
A dishonored note should be:
transferred to accounts receivable Correct or written offIncorrectIncorrect