Chapter 7 Questions

Question 1

The supplementary record providing information on each customer is called the _____.

Answer 1

accounts receivable ledger

Question 2

Sellers allow customers to use credit cards for all of the following reasons: (3)

Answer 2

Seller does not need to decide who gets credit
Seller receives cash sooner than if credit is granted directly to the customers
May allow seller to increase sales volume

Question 3

The direct write-off method is permitted when:

Answer 3

results approximate the allowance method.

Question 4

The allowance method of accounting for bad debts has the following advantages over the direct write-off method including: (2)

Answer 4

Records estimated bad debts expense in the period when the related sales are recorded
Records accounts receivables on the balance sheet at the estimated amount of cash to be collected

Question 5

The goal of the accounts receivable methods is to adjust the Allowance for Doubtful Accounts balance so that:

Answer 5

The adjusted balance is equal to the estimate of the uncollectible accounts receivable.

Question 6

On July 18, Jerry Pope signed a note when he borrowed $1,200 at 12 percent for 30 days from Second National Bank. In this situation Pope is…

Answer 6

Pope is the maker of the note

Question 7

A 60-day, 11 percent, promissory note dated June 10 matures on…

Answer 7

August 9