Reference no: EM132566629

Questions -

Q1) The party making the promise to pay the promissory note is the

a. maker.

b. lender.

c. payee.

d. None of these choices are correct.

Q2) Days' sales in receivables is determined by dividing

a. Average Accounts Receivable by Average Daily Sales.

b. 365 by Accounts Receivable.

c. Average Accounts Receivable by Sales.

d. None of these choices are correct.

Q3) If Modern Company received $3,650 from Connor Young Company on March 12 for the total amount of an account that had been written off on March 1, the entry to reinstate the account under the direct write-off method would include

a. a credit to Bad Debt Expense of $3,650.

b. a credit to Cash of $3,650.

c. a debit to Bad Debt Expense of $3,650.

d. a debit to Allowance for Doubtful Accounts of $3,650.

Q4) A 90-day, 10% note for $9,000, dated April 15, is received from a customer on account. The face value of the note is

a. $8,100.

b. $9,900.

c. $9,225.

d. $9,000.

Q5) An account receivable that has been written off against the allowance account

a. may be reinstated by an entry that reverses the write-off.

b. may be collected later.

c. may be paid in cash and recorded as a receipt on account.

d. All of these choices are correct.

Q6) Accounts receivable turnover is calculated by dividing

a. Days' Sales in Receivables by Accounts Receivable (ending balance).

b. Average Accounts Receivable by Sales.

c. Average Accounts Receivable by Average Daily Sales.

d. Sales by Average Accounts Receivable.

Q7) The direct write-off method is acceptable for use by businesses when

a. they sell most of their goods or service for cash or credit card.

b. they make all their sales on account and do not have cash sales.

c. they have large receivable balances as a part of current assets.

d. a large amount of receivables will become uncollectible.