Quiz 8 Flashcards
accounts receivable arise from credit sales to customers by both retailers and wholesalers
true
as long as a company accurately records credit sales informations, it is not necessary to have accounts for specific customers
false
if a customer owes interest on a bill accounts receivable is debited and interest expense is credites
false
TechCom customer RDA electronics paid off an $8,300 balance on its account receivable techCom should record the transaction as a debit to accounts receivable RDA electronics and a credit to cash
false
the aging of accounts receivable examines each account receivable to estimate the amount that is uncollectible
true
the percentage of sales approach for estimating bad debts is based on the idea that a percent of a companies credit sales for the period are uncollectible
true
TechCom has $40,000 in outstanding accounts receivable. Past experience suggests that 5% of outstanding receivables are uncollectible. The current balance in the allowance for doubtful accounts is $2,500 debit. The required adjusting journal entry includes a debit to bad debt expense for $4,500.
true
TechCom has sales of $350,000 and estimates that 0.5% of its sales are uncollectible. The amount of bad debt expense to be recorded is $17,500.
false
The direct write-off method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible
true
the direct write off method satisfies generally accepted accounting priciples
false
the direct write off methods does not use the allowance for doubtful account
true
the allowance method complies with the generally accepted accounting principle of matching
true
a promissory note is a written promise to pay a specified amount of money either on demand or at a definite future date
true
the formula for computing interest on a note receivable is principal multiplied by interest rate multiplied by time
true
Augusto Diaz borrowed $1,000 and signed a 6-month promissory note at 11% interest. The total amount of interest is $110.00.
false
Phuong Vo borrowed $5,000 and signed a 3-month promissory note at 10%. The total interest on the note is $125.
true
TechCom received a $1,000, 90-day, 10% note receivable from Danny Outlaw. The journal entry to record the note includes a debit to notes receivable
true
a dishonoured note receivable is reclassified as an account receivable
true
a high accounts receivable turnover rate in comparison with that of competitors suggest that the firm should tighten its credit policy
false
a promissory note from a customer……
is a note receivable
the maturity date of a note receivable is….
the day the note is due to be paid
the cash to be received at maturity on a $10,000, 8% 90-day note receivable is….
10,197.26
The Liccorish Pizza bought $5,000 worth of merchandise from TechCom and signed a 90-day, 10% promissory note for the $5,000. TechCom’s journal entry to record the transaction is
notes receivable 5,000 debited sales credited 5,000
accounts receivable turnover measures
how often a company converts its average accounts receivable balance into cash during the period
