Chapter 4: Accounts Receivable

Question 1

T/F

Dishonored Receivables and Overdue Notes are included as part of Notes Receivable in SFP.

Answer 1

False

Question 2

T/F

An entity shall classify an aset as current when the entity expects to realize the asset or intends to sell or consume it in the entiy’s normal operating cycle , or when the entity expects to realize the asset within twelve months after the reporting period.

Answer 2

True

Question 3

T/F

Nontrade receivables are classified as nocurrent assets if collectible beyond one year.

Answer 3

True

Question 4

T/F

Accounts Receivable known as “Cutomer’s accounts”

Answer 4

True

Question 5

T/F

Customer’s credit balances are classified as current Liabilities.

Answer 5

True

Question 6

T/F

The initial amount recognized for accounts receivable shall be reduced by adjustments which in the ordinary course of business reduce the amount recoverable from the customer

Answer 6

T

Question 7

T/F

The gross methid is the common and widely used method because it is simple to apply.

Answer 7

T

Question 8

T/F

Cash flows relating to short-term accounts receivable are discounted.

Answer 8

F

Question 9

T/F

A cash discount is a reduction from an invoice price by reason of prompt payment.

Answer 9

T

Question 10

T/F

Advances to affiliates are Noncurrent Investments.

Answer 10

T

Question 11

T/F

Trade Receivables which are expected to realize in cash within the normal operating cycle or one year, whichever is longer, are classified as current assets.

Answer 11

T

Question 12

T/F

Special deposits on contract bids classified as noncurrent assets

Answer 12

T

Question 13

T/F

Advances to suppliers are noncurrent assets

Answer 13

F

Question 14

T/F

Assets shall becarried at above their recoverable amount

Answer 14

T

Question 15

T/F

If the customer fails to pay within the 10-day discount period, the gross amount of the invoice price must be paid within 30 days from the invoice date.

Answer 15

True

Question 16

T/F

Claims receivable are noncurrent assets.

Answer 16

F

Question 17

T/F

The details of the total trade and other receivables shall be disclosed in the notes to financial statements.

Answer 17

True

Question 18

T/F

Dividend receivable, accrued rent receivable, accrued royalties receivable, and accrued interest receivable are noncurrent assets.

Answer 18

F

Question 19

T/F

Accounts receivable shall be recognized initially at amortized cost.

Answer 19

F

Question 20

T/F

In net method, the accounts receivable are recorded at the cash disount minus the invoice price whether taken or not taken.

Answer 20

F

Question 21

T/F

In the abscence of any contrary statement, doubtful acounts should be classified as administrative expense.

Answer 21

T

Question 22

T/F

The Direct Writeoff methof is not permitted under IFRS.

Answer 22

T

Question 23

T/F

The Direct writeoff approach is often used by small businesses because it is simple to apply.

Answer 23

T

Question 24

Requires recognition of a bad debt loss only when the accounts proved to be worthless.

Answer 24

Direct Writeoff Method

Question 25

The common and widely used method because it is simple to apply.

Answer 25

Gross Method

Question 26

Is the amount of cash expected to be collected or the estimated recoverable amount.

Answer 26

NRV

Question 27

Those Supported by formal Promises to pay in the form of notes.

Answer 27

Notes Receivable

Question 28

Those Supported by formal Promises to pay in the form of notes.

Answer 28

Notes Receivable

Question 29

Means that frieght charge on the goods shipped is already paid by the seller.

Answer 29

Freight Prepaid

Question 30

The subsequent measurement of accounts receivable.

Answer 30

Amortized Cost

Question 31

Trade receivables and nontrade receivables which are currently collectible shall be presented on the face of statement of finacial position as "one line item" called _______________.

Answer 31

Trade and other receivables

Question 32

A Cash Discount is known as ____________ on the part of seller and a ________________ on the part of buyer.

Answer 32

Sales Discount Purchase Discount

Question 33

Is a financial asset that represents a contractual right to receive cash or another financial asset.

Answer 33

Receivable

Question 34

Means that ownership of the goods purchased is vested in the buyer upon receipt thereof.

Answer 34

FOB Destination

Question 35

Is an Unconditional written agreement to pay a certain sum to pay a certain sum of money on a specific or determinable date to order of the payee or the bearer.

Answer 35

Negotiable Promissory Note

Question 36

Refers to claims arisign from sale of Merchandise or Services in the onrdinary course of business.

Answer 36

Trade Receivables

Question 37

Are open account; Not supported by a promissory notes.

Answer 37

Accounts Receivable

Question 38

Requires the recognition of a bad debts loss if the accounts are doubtful of collection.

Answer 38

Allowance Method

Question 39

Means that freight charge on the goods shipped is not yet paid.

Answer 39

Freight collect

Question 40

The initial measurement of accounts receivable.

Answer 40

Fair Value Plus Transaction Costs

Question 41

Means that ownership of the goods purchased is vested in the buyer upon shipment thereof.

Answer 41

FOB Shipping Point

Question 42

Are credit balances in accounts receivable resulting from overpayments, returns, and allowances and advance payments from customers.

Answer 42

Customers' credit balances

Question 43

Nontrade receivables which are expected to be realized in cash within one year classified as ___________.

Answer 43

Current Assets

Question 44

Known as Customer's accounts, trade debtors and trade accounts receivable.

Answer 44

Accounts Receivable

Question 45

The _________________ account is classified as "other income".

Answer 45

Sales Discount forfeited

Question 46

If the granting of credit and collection of accounts are under the charge of an officer other than sales manager, doubtful aacounts shall be considered as _________?

Answer 46

Administrative Expense

Question 47

If the granting of credit and collection of accounts are under the charge of an sales manager, doubtful aacounts shall be considered as _________?

Answer 47

Distribution Cost

Question 48

What are the two accounting for bad debts?

Answer 48

1. Allowance Method 2. Direct Writeoff Method

Question 49

What are 2 Standards found in Receivables?

Answer 49

PFRS 15 PFRS 9

Question 50

What are the 4 kinds of treatment when estimating the net realizable value of accounts receivable.

Answer 50

Allowance for freight charge Allowance for sales return Allowance for sales discount Allowance for doubtful accounts

Question 51

Methods of recording Credit Sales

Answer 51

1.Gross Method 2. Net Method

Question 52

Classification of Receivables

Answer 52

1. As to source 2. As to SFP

Question 53

The journal entry when collection is made beyond the discount period under Net Method.

Answer 53

Cash Accounts Receivable Sales Discount Forfeited

Question 54

The journal Entry when collection is made within the discount period under Net Method.

Answer 54

Cash Accounts Receivable

Question 55

The journal entry when "the accounts proved to be worthless".

Answer 55

Bad Debts Accounts receivable

Question 56

The JE when "The accounts that are previously written off as worthless are recovered or collected".

Answer 56

AR Bad debts Cash AR

Question 57

JE when "The accounts that are previously written off as worthless are unexpectedly recovered or collected".

Answer 57

AR ABD Cash AR

Question 58

The journal entry when collection is made within the discount period under Gross Method.

Answer 58

Cash Sales Discount Accounts Receivable

Question 59

The journal entry when "the accounts subsequently discovered to be worthless".

Answer 59

Allowance for Bad Debts Accounts receivable

Question 60

The journal entry when collection is made beyond the discount period under Gross Method.

Answer 60

Cash Accounts Receivable