General Accounts Receivable MCQs

1. After goods have been shipped, what must be sent to the buyer?

2. What are two examples of documents to carry when visiting a customer for a collection?

3. Chapter 7 bankruptcy entails what activity?

4. What can happen if a company fails to read an invoice?

5. What does “DSO” stand for, and how is it calculated?

6. Why is the allowance method used over the direct write off method when dealing with uncollectible accounts receivable?

7. True or False? Net sale on a shipment of goods is the total amount of goods sold minus the non-acceptable goods sold to a customer

8. True or False? A higher accounts receivable turnover ratio is generally favorable.

9. Account receivables are categorized as current assets assuming they are due within

10. How often is a bad debt expense closed?

11. When computing an average balance of accounts receivable one should use

12. Sometimes when an account receivable is not paid a business can turn to

13. An account receivable turnover ratio is 5, while the company sales were $100,000. What is average balance of accounts receivable?

14. Why is it central to the life of a business that sales and credit departments work together?

15. Compute the accounts receivable collection period if a company had $400,000 net credit sales and its accounts receivable balance was $30,000.

16. Which of the following is an example of an accounts receivable?

17. Compute the accounts receivable collection period if a company had $500,000 net credit sales and its accounts receivable balance was $40,000.

18. What is one downside to electronic billing?

19. When a customer has no credit history, what is a possible option to make a sale?

20. Why are there conflicts between credit and sales?

21. Who is the best contact for receiving information about legal issues and credit?

22. What terms do sellers prefer to sell to customers?

23. The title of a good transfers to the buyer at the shipping point. This is likely an example of a/an _____ shipping point.

24. When you have converted valuable financial data to an authorized, unreadable state, what has happened to it?

25. What is the last resort when it comes to collections?

26. What is an example of a modern software that handles accounts payable?

27. In order to secure you a line of credit, you could use accounts receivable as _______.

28. A common payment term for accounts receivable is:

29. What does GAAP stand for?

30. How should a collections fax be addressed to be used to its greatest advantage?

31. True or False? A secured creditor is someone who that has a legal right to the company's assets.

32. What is an advantage of a seller deciding to offer its goods and services on credit?

33. What is the defintion of accounts receivable?

34. Which are examples of document tools that are valuable to accounts receivable?

35. What do terms of an invoice suggest?

36. What must a debtor file in a voluntary bankruptcy?

37. An example of nontrade receivables are

38. True or False? With the help of aging one can usually detemine uncollectable accounts receivable.

39. A subsidiary ledger for accounts receivable has the information on which of the following

40. Which of the following is a good rule to follow in accounts receivable?

41. What is a revolutionary solution to issues in billing accuracy?

42. Another name for an account receivable is

43. What is bankruptcy?

44. True or False? Invoices are typically used by the business and deliviered to the customer for an agreed payment time.

45. True or False? Aging is often broken up into several categories such as current, 1-30 days past due, 31-60 days past due etc.

46. True or False? Sometimes a company will provide a cash discount in order to incentivize a customer to pay in a timely fashion.

47. True or False? A debtor can pay before its due date.

48. Which of the following are two common bookkeeping methods?

49. What three important documents, and following material, are critical in a financial statement for credit evaluation?

50. What function do letters of credit serve?

51. What type of customers are letters of credit most useful for?

52. Which method is required by the GAAP?

53. What is an excellent two-pronged approach to collections?

54. The benefit of a vague invoice is what?

55. A supplier is an unsecured creditor when

56. Company X has sales of $5,000,000 and its average balance for accounts receivable was $50,000. What is the accounts receivable turnover ratio?

57. How should sales staff be measured to assure their performance is high?

58. What is the standard calculation for accounts receivable turnover?

59. True or False? A postdated check can be deposited and is considered money.

60. What data standard is competing with EDI, and what does it mean?

61. When looking at a company's accounting records, obtaining the accounts receivable will

62. What is chapter 11 bankruptcy?

63. What is the purpose of antitrust laws?

64. How do you calculate the days' sales in accounts receivable?

65. What is the ISO standard for financial services messaging?

66. There are two tests for insolvency. What are they?

67. You have a customer whose financials are deteriorating and credit limit is likely to be reduced. What is the best course of action?

68. True or False? Signing a contract always creates a liabiity or asset.

69. True or False? According to the IRS, bad debts can always be used as an allowable deduction when computing profits for a company.

70. What might a company do to increase their float if they are deceitful?

71. If a company is to be audited for credit approval, what three statements must be provided?

72. Who is chapter 12 bankruptcy intended for?

73. What do we call it when a firm extends credit terms that encourage the buyers of certain products to take delivery before the peak sales period and to defer payment until after the peak sales period?

74. If your AR turnover went up from 5 to 7 over the course of a year, it means that _____________.

75. In a 'Quotation' , it is vital that the contract clearly define the agreed commercial terms and conditions. Which one does it exclude?

76. On January 1, 2007 Al's Cleaning Services received an advance payment of $3,000 for three months of cleaning services. The $3,000 was recorded as Unearned Cleaning Revenue because the services had not yet been provided. Which of the following will the January 31, 2007 adjusting entry include?

77. A company would choose to factor it's receivables because:

78. Athens Corp. sold 80% pro rata interest in a $2,000,000 note receivable to Sparta Company Ltd. for $1,920,000. The note was originally issued at its face amount. Future benefits and costs of servicing the note are immaterial. If the provisions of SFAS 140 are followed, the amount of gain or loss that the former should recognize on this transfer of a partial interest _________ .

79. Allowance for doubtful accounts is ________

80. An accrued revenue would be shown on the balance sheet as _____

81. The net realizable value of Accounts Receivable is__________.

82. ABC Services provides accounting services to a client and collects $1,000 in cash. How and in which of the accounts will the increase in cash be recorded by ABC Services as a result of providing this service?

83. A Subsidiary ledger containing only customer accounts is a/an

84. Why would a service item be kept in inventory in the accounting system?

85. Advances received from the customers are invoiced at the time of advance payment?

86. Most of the companies expect that over ____ of their billings will be collected.

87. A company's accounting policy for recording revenues______

88. The adjusting journal entry to record accrued interest revenue is__________________

89. At the end of the fiscal year, Accounts Receivable has a balance of $100,000 and Allowance for Doubtful Accounts has a balance of $7,000. The expected net realizable value of the Accounts Receivable will be:

90. What is meant by Factoring?

91. Allowance for Accounts Receivable is called ________

92. An amount added to the cost of merchandise to establish the selling price is called:

93. Is the Accounts Receivable department considered 'revenue generating'?

94. Accounts Receivable is recorded as _________

95. An invoice is_____________

96. A company recorded two sales of $20.000 and $30,000 on March 1, 2007 under the credit terms of 3/10, n/30. Payment for the $20,000 sale was received on March 10, 2007. Payment for the $30,000 sale was received on March 25, 2007.What would be the gross sales for the month of March? Gross method Net method

97. The antecedents of receivables are critical to the management of receivable assets and is the key driver of the cost to manage a company's revenue stream. A simple formula to illustrate this point is ____________.

98. In which of the financial statements will the sales discount be reflected?

99. The antecedents of Receivables are defined as all the up-front operations required for creating a receivable. They do not involve which of the following:

100. Why do companies bother with adjustments? Wouldn't it be easier to let items clear up the following month?

101. On the balance sheet, Receivables may be classified as ________

102. Why must companies actively manage their outstanding receivables?

103. How do collection agencies typically work with a company with receivables?

104. Why would a company break revenue up into specific accounts instead of having one master 'revenue' account?

105. The credit policy of Spurting Products inc. is '1.5/10, net 35.' At present, 30% of the customers take the discount, 62% pay within the net period, and the rest pay within 45 days of the invoice. If all the customers took advantage of the cash discount, the Receivables ________.

106. Before an order can be routed to fulfillment, it must be reviewed to ensure that it meets the conditions of an acceptable order. Which of the following elements do these conditions include? 1.Price 2.Freight terms (which party pays freight) 3.Payment terms 4.Delivery (or) completion date

107. Which one of the criteria that must be met before control is deemed to be surrendered?

108. Under the gross method and the net method, which amount should appear as net sales in the March income statements?

109. At the end of the fiscal year, before the accounts are adjusted, Account Receivable has a balance of $200,000 and Allowance for Doubtful Accounts has a credit balance of $2500. If the estimate of uncollectible accounts determined by aging the Receivables is $8500, the amount of uncollectible accounts expense will be:

110. If the balance of the Allowance for Doubtful Account exceeds the amount of a bad debt being written off, the entry to record the write off against the allowance account results in:

111. By what amount will Accounts Receivable be assigned and notes payable decreased?

112. In which case would revenue be recorded?

113. What is the expectation of most companies and their billings?

114. A customer has two accounts, and mistakenly makes a payment on the wrong one.� What is the best way to handle this outside of returning the payment to the customer?

115. Which two key attributes of a quotation promote excellent receivable results?

116. On a company's Balance Sheet, A/R is the amount_________.

117. A customer used his credit card to pay $400 for the services received. The credit card company charged 2.5% as service charges. What is the amount that the company will record as deposit to its checking account as a result of the sales transaction?

118. In accounting for the transfer of financial assets, which one is the approach underlying the accounting prescribed by SFAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities?

119. Which is used to calculate the Accounts Receivable turnover ratio?

120. The Sales Returns and Allowances – Account is classified as a/an _________ .

121. A customer has purchased several service items.� Is it important to enter them individually?

122. A firm receives cash for 30% of its sales with the remaining 70% being credit sales. Of the credit sales, 20% are collected in the month of the sale, 60% in the month following the sale, and 20% in the second month following the sale. The anticipated sales for January through April are $400,000, $500,000, $600,000, and $400,000 respectively. What will be the cash receipts in the month of April?

123. Advances received from the customers are shown_______

124. A firm's inventory turnover (IT) is 5 times on a cost of goods sold (COGS) of $800,000. If the IT is improved to 8 times while the COGS remains the same, a substantial amount of funds is released from or additionally invested in inventory. In fact, an amount of _________.

125. Are adjustments to book interest earned but not received ever reversed?

126. Ninety-percent of Vogel Bird Seeds' total sales of $600,000 is on credit. If its year-end Receivables turnover is 5, the average collection period (based on a 365-day year) and the year-end Receivables are, respectively

127. Use the following information to compute interest revenue. Notes receivable $10,000, due in 90 days with interest at 10%.

128. A system where inventory is not kept on hand but is ordered to fulfill orders once needed is

129. The adjusting entry to estimate the amount of Receivables that a business house fears will not be collected is _________________:

130. Henry Stores, Inc. had sales of $2,000,000 during December. Experience has shown that merchandise equaling 7% of the sales will be returned within 30 days and an additional 3% will be returned within 90 days. The returned merchandise is readily resalable. In addition, merchandise equaling 15% of the sales will be exchanged for merchandise of equal or greater value. What amount should the store report as net sales in its income statement for the month of December?

131. Accounts Receivable that arise from the regular sale of merchandise is also referred to as____________

132. Bell Corp. had a net income of $100,000, paid income taxes of $30,000, and incurred interest expenses of $8,000. What was their times interest earned ratio?

133. At the end of the year, Loose Construction Co. Ltd.used an income statement method of estimation and calculated $20,000. They currently have a credit balance of $2,000 in Allowance for Doubtful Accounts. What is the correct entry to record the estimated Uncollectible Accounts Expense?

134. To which accounting concept does Accounts Receivable relate?

135. Which is not true about interest on Receivables?

136. Bad debts are generally______

137. When a note receivable is dishonored, for which amount is Accounts Receivable debited?

138. Correcting inaccurate invoices is usually accomplished in four ways. Which of the following is the best way?

139. Financial Statement ratio analysis may be undertaken to study liquidity, turnover, profitability, and other indicators. The current ratio indicates ___________________

140. What is B2B?

141. When using the indirect method of preparing the 'Cash Flows from Operating Activities' section of a statement of cash flows, a net increase between the opening and closing balances of Net Accounts Receivable will __________.

142. You received an invoice that shows credit terms of 2/10, n/60. What does the number 10 in the credit terms refer to?

143. Why is 'day's sales in Accounts Receivable' important to calculate?

144. Using the following information, calculate net sales revenue. Sales Revenue $100,000, Sales Discounts $3,000, Sales Returns and Allowances $2,000 and Cost of Goods Sold $40,000

145. Where should Sales Discount be recorded?

146. The total of the schedule of Accounts Receivable should be equal to __________

147. Which can be used to calculate average collection period?

148. The Method of recording bad debt expenses is known as the____________________

149. Credit card discounts are reported on the income statement as

150. When a payment is received from a customer but is not yet deposited into the bank, the amount lies in the ......

151. Why is it important to review and analyze AR ratios?

152. A business-printed or catalog price is called the ______

153. What is meant by Accounts Receivable?

154. Increasing the credit period from 30 to 60 days in response to a similar action taken by all the competitors of a firm will result in:

155. Which statement is correct?

156. Companies that do not carry enough inventory will incur _______

157. Under which concept do goods sold to a sole proprietorship firm fall?

158. What is meant by 'Deferred Revenue'?

159. Which will not improve the current ratio?

160. A customer has ten open invoices of various amounts, and sends a check which does not indicate which invoices are being paid.� The best thing to do is:

161. Which would the AR department book an adjustment for at year end?

162. Bad Debts are shown in_________

163. The receipt of cash from a customer to clear his accounts would be recorded as___________.

164. The Accounts Receivable department uses a_________

165. An increase in the firm's receivable turnover ratio means that _____

166. Credit given to a customer for part of the sales price of the merchandise not returned is called ______

167. Merchandise returned by a customer for a credit on account or a cash refund is called __________

168. What is the best first step to take with delinquent payers?

169. Factoring Receivables is a __________.

170. Which statement regarding the calculation of 'day's sales' in receivables is incorrect?