FINANCIAL ACCOUNTING ...RECEIVABLES QUESTIONS AND ANSWERS...100%#
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Course
ACC 202
Institution
ACC 202
8.1-1 The two major types of receivables are accounts receivable and notes receivable.
Answer: True LO: 8-1
Diff: 1
EOC Ref: S8-1
AACSB: Knowledge/Content
AICPA Business Perspective Competencies: Strategic/Critical Thinking AICPA Functional Competencies: Measurement, Reporting
8.1-2 The c...
,8.1-5 Which of the following is a benefit of selling on credit?
A) Revenues are increased by making sales to a wider range of customers.
B) Expenses are reduced by making sales to a wide range of customers.
C) Some customers do not pay, creating an expense.
D) Cash is received sooner.
8.1-6 Which of the following is a disadvantage of selling on credit?
A) Sales can be made to a more diverse group of customers.
B) Profits are increased by making sales to a wider range of customers.
C) Some customers do not pay, creating an expense.
D) Prices must be reduced when selling on credit.
8.1-7 Which of the following is included in the category Other receivables?
A) Loans to employees
B) Accounts receivables
C) Notes receivables
D) Investments
,8.1-8 A record that contains the details by customer or vendor of the individual account balances would
be called a:
A) control account.
B) subsidiary ledger.
C) journal.
D) liability account.
8.1-9 A creditor is a person or business who:
A) has a receivable from another party.
B) has a payable to another party
C) invests money in the stock of a company
D) purchases goods on account.
8.1-10 Which of the following statements is TRUE?
A) Accounts receivable are more liquid than cash.
B) Notes receivable are always due in 30 days.
C) Notes receivable are longer in term than accounts receivable.
D) Accounts receivable are liabilities.
, 8.1-11 GAAP prefers companies to use the:
A) direct write-off method to evaluate bad debts.
B) allowance method to evaluate bad debts.
C) amortization method to evaluate bad debts.
D) 360- day method to evaluate bad debts.
8.1-12 Which of the following is NOT a key issue in controlling and managing receivables?
A) Separate cash-handling, credit, and accounting duties to keep employees from stealing cash
collected from customers.
B) Extend credit only to customers who are most likely to pay.
C) Pursue collection from customers to maximize cash flow.
D) Separate the responsibility for custody and protection of inventory assets from the accounting
for inventory assets.
8.1-13 Which of the following duties should NOT be performed by a credit department?
A) Monitor customer payment records.
B) Handle cash receipts.
C) Evaluate customers who apply for credit.
D) Review applicant's income and credit history.
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