Basic Accounts Receivable MCQ

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

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

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

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

The Accounts Receivable department uses a_________

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

Bad Debts are shown in_________

Which of the following would the AR department book an adjustment for at year end?

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:

Which of the following will not improve the current ratio?

What is meant by "Deferred Revenue"?

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

Companies that do not carry enough inventory will incur _______

Which of the following statements is correct?

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:

What is meant by Accounts Receivable?

A business-printed or catalog price is called the ______

Why is it important to review and analyze AR ratios?

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

Credit card discounts are reported on the income statement as

The Method of recording bad debt expenses is known as the____________________

Which of the following can be used to calculate average collection period?

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

Where should Sales Discount be recorded?

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

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

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

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 __________.

What is B2B?

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

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

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

Bad debts are generally______

Which of the following is not true about interest on Receivables?

To which accounting concept does Accounts Receivable relate?

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?

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?

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

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?

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

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

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

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

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

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 _________.

Advances received from the customers are shown_______

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?

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

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

Which of the following is used to calculate the Accounts Receivable turnover ratio?

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

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?

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

Which two of the following key attributes of a quotation promote excellent receivable results?

1.Feasibility/ deliverability of the offer 
2.Payment terms 
3.Clear commercial terms and conditions agreed upon by both the parties. 
4.Applicable sales (or) use tax

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?

What is the expectation of most companies and their billings?

In which of the following cases would revenue be recorded?

On January 1, Davis College assigned $500,000 of Accounts Receivable to the Scholastic Finance Company. It gave a 14% note for $450,000 representing 90% of the assigned accounts and received proceeds of $432,000 after deduction of a Scholastic, including interest for 1 month on the remittance. By what amount will Accounts Receivable be assigned and notes payable decreased?

A/R Assigned Notes Payable

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:

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:

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.

Under the gross method and the net method, which of the following amounts should appear as net sales in the March income statements?

A transfer of financial assets in accordance with SFAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities may be treated as a sale if the transferor surrenders control of the assets. Which of the following is one of the criteria that must be met before control is deemed to be surrendered?

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

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 ________.

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

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

Why must companies actively manage their outstanding receivables?

On the balance sheet, Receivables may be classified as ________

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

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:

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

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 ____________.

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

An invoice is_____________

Accounts Receivable is recorded as _________

Is the Accounts Receivable department considered "revenue generating"?

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

Allowance for Accounts Receivable is called ________

What is meant by Factoring?

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:

The adjusting journal entry to record accrued interest revenue is__________________

A company's accounting policy for recording revenues______

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

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

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

A Subsidiary ledger containing only customer accounts is a/an

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?

The net realizable value of Accounts Receivable is__________.

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

Allowance for doubtful accounts is ________

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 _________ .

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

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?

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

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

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?