Home » Quizzes » Accounting for accounts receivable » Multiple choice questions (MCQs) quiz Accounting for accounts receivable Multiple choice questions (MCQs) quiz Posted in: Accounting for accounts receivable (quizzes) By: Rashid Javed | Updated on: August 25th, 2024 /20 ABOUT THIS QUIZChapter: Accounting for accounts receivableQuiz type: Multiple choice questions (MCQs) quizNumber of questions: 20Estimated time required: 10 - 12 minutesPassing score: 60%Your result will be displayed at the end of the quiz. 1. The journal entry for recording accounts receivable is: Sales Dr. and Accounts Receivable Cr. Accounts Receivable Dr. and Sales Cr. Cash Dr. and Sales Cr. Sales Dr. and Accounts Payable Cr. 2. The payment terms 2/10, n/30 tell us that: a 10% discount will be awarded if the payment is made within 2 days of invoice date; otherwise, the full amount is payable within 30 days of invoice date. a 2% discount will be awarded if the payment is made within 10 months of invoice date; otherwise, the full amount is payable within 30 months of invoice date. a 0.5% discount will be awarded if the payment is made within 10 days of invoice date; otherwise, the full amount is payable within 30 days of invoice date. a 2% discount will be awarded if the payment is made within 10 days of invoice date; otherwise, the full amount is payable within 30 days of invoice date. 3. The cash discount (also known as purchase discount or sale discount) is given to customers for: early payments bulk purchase frequent purchases good business relations 4. The accounts receivable that cannot be collected because of their bankruptcy or another reason are termed: collectible accounts bad customers doubtful accounts uncollectible accounts 5. Under allowance method, the journal entry to record uncollectible accounts expense is: Allowance for Doubtful Accounts Dr. and Uncollectible Accounts Expense Cr. Uncollectible Accounts Expense Dr. and Allowance for Doubtful Accounts Cr. Uncollectible Accounts Expense Dr. and Accounts Receivable Cr. Accounts Receivable Dr. and Uncollectible Accounts Expense Cr. 6. Fortune Company uses allowance method to recognize its uncollectible accounts expense. It provides you the following selected information:Accounts receivable on December 31, 2017: $380,000Required balance in Allowance for Doubtful Accounts account on December 31, 2017: $3,000Existing balance in Allowance for Doubtful Accounts account on December 31, 2017: $2,500The journal entry required to recognize uncollectible accounts expense on December 31, 2017 is: Uncollectible Accounts Expense 500 Dr. and Accounts Receivable 500 Cr. Uncollectible Accounts Expense 2,500 Dr. and Accounts Receivable 2,500 Cr. Uncollectible Accounts Expense 500 Dr. and Allowance for Doubtful Accounts 500 Cr. Uncollectible Accounts Expense 3,000 Dr. and Allowance for Doubtful Accounts 3,000 Cr. 7. Allowance for doubtful accounts is an example of: asset account liability account expense account contra asset account 8. Under allowance method, the journal entry to write off an uncollectible account is: Allowance for Doubtful Accounts Dr. and Accounts receivable Cr. Accounts receivable Dr. and Allowance for Doubtful Accounts Cr. Uncollectible Accounts Expense Dr. and Accounts Receivable Cr. Accounts Receivable Dr. and Uncollectible Accounts Expense Cr. 9. Under direct write off method, the journal entry to recognize uncollectible accounts expense is: Accounts receivable Dr. and Sales Cr. Uncollectible Accounts Expense Dr. and Sales Cr. Uncollectible Accounts Expense Dr. and Accounts Receivable Cr. Accounts Receivable Dr. and Uncollectible Accounts Expense Cr. 10. Under allowance method, the correct journal entry to reinstate a previously written off account is: Allowance for Doubtful Accounts Dr. and Uncollectible accounts expense Cr. Accounts Receivable Dr. and Allowance for Doubtful Accounts Cr. Allowance for Doubtful Accounts Dr. and Accounts Receivable Cr. Accounts Receivable Dr. and Sales Cr. 11. The correct journal entry for collection of accounts receivable is: Cash Dr. and Accounts Receivable Cr. Cash Dr. and Sales Cr. Cash Dr. and Accounts Payable Cr. Accounts Receivable Dr. and Cash Cr. 12. A promissory note is written by: a creditor in favor of a debtor a customer in favor of another customer a seller in favor of another seller a debtor in favor of a creditor 13. In a promissory note, the debtor makes: a conditional promise to pay a certain sum of money an unconditional promise to pay a certain sum of money a conditional promise to buy a certain certain quantity of goods an unconditional promise to buy a certain certain quantity of goods 14. Which of the following journal entries converts an account receivable into a note receivable? Accounts Receivable Dr. and Note Receivable Cr. Notes Receivable Dr. and Accounts Receivable Cr. Notes Receivable Dr. and Sales Cr. Notes Receivable Dr. and Customers Cr. 15. Accounts receivable are reported in the balance sheet: at face value at gross value at net realizable value at net credit sales value 16. John & Stewart Company provides you the following selected information:Balance in accounts receivable account on December 31, 2017: $70,000Balance in allowance for doubtful accounts account on December 31, 2017 after making adjusting entry for uncollectible accounts expense: $2,000Uncollectible accounts expense for the year 2017: $500On the basis of above information, the net realizable value of accounts receivable to be shown in the balance sheet as at December 31, 2017 would be: $72,000 $69,500 $68,000 $70,500 17. US Company uses sales method to estimate its credit losses. It provides you the following selected information:Total credit sales for the year 2017: $800,000Estimated uncollectible credit sales for the year 2017: 1%Balance in allowance for doubtful accounts account on December 31, 2017 before making adjusting entry for uncollectible accounts expense: $5,000The uncollectible accounts expense to be reported in the income statement for the year 2017 is: $13,000 $3,000 $8,000 $5,000 Computation:800,000 x 0.01 = $8,000 18. The main purpose of factoring accounts receivable is: to create an additional guarantee of collection to establish a legal proof for future use to meet immediate cash needs to invest accounts receivable in another business 19. In a factoring with recourse arrangement, the loss resulting from bad debts is born by: the organization buying the accounts receivable the organization selling the accounts receivable the intermediate organization all of the above 20. In a factoring without recourse transaction, the loss resulting from bad debts is born by: an intermediate organization the CEO of the orgnization the organization selling the accounts receivable the organization buying the accounts receivable 0% Restart quiz Next » Help us grow by sharing our content ♡
Nisha
Great!