Multiple Choice
Identify the
choice that best completes the statement or answers the question.
|
|
|
1.
|
Which principle states that positive (debit)
balances and negative (credit) balances in accounts receivable cannot under any circumstances be
compensated?
a. | Prudence principle | b. | Accrual principle | c. | No offsetting
principle | d. | Matching principle
|
|
|
|
2.
|
Which category of accounts receivable corresponds
to the following two criteria?
o Claim is
uncontested by customer;
o The amount
that will be collected is doubtful given the financial or economic situation of the
debtor
a. | Ordinary accounts receivable | b. | Doubtful accounts receivable | c. | Disputed accounts receivable | d. | Uncollectible accounts receivable |
|
|
|
3.
|
In an aged balance, in which order are the balances
of each individual customer account reviewed and structured?
a. | By due date | b. | By decreasing amount | c. | By increasing
amount | d. | By alphabetical order
|
|
|
|
4.
|
When the collectibility of an amount already
included in revenue is uncertain, the uncollectible amount, or the amount in respect of which
recovery has ceased to be probable, is preferably:
a. | Not recognized. | b. | Recognized as an adjustment of the amount of revenue originally
recognized. | c. | Recorded directly
in retained earnings. | d. | Recognized as an
expense. |
|
|
|
5.
|
With which principle does the allowance method
conform?
a. | Prudence principle | b. | Matching principle | c. | No offsetting
principle | d. | Consistency principle
|
|
|
|
6.
|
“Provision for bad debts” is a
contra-asset account.
|
|
|
7.
|
Which method is used for reporting accounts
receivable in the financial statements?
a. |
Accounts receivable (gross) |
100 |
Less provision for doubtful accounts |
-70 |
Accounts receivable (net) |
30 |
| b. |
Accounts receivable (net of provision for doubtful accounts: 70) |
30 |
| c. |
|
Gross value |
Provisions |
Net value |
Accounts receivable |
100 |
70 |
30 |
| d. | All of the above methods are
used.
|
|
|
|
8.
|
Which of the following statements is
false?
a. | Cash equivalents are short-term
investments. | b. | Cash equivalents
are investments that are subject to a significant risk of changes in
value. | c. | Cash equivalents are highly liquid
investments. | d. | Cash equivalents
are investments that are readily convertible into known amounts of
cash. |
|
|
|
9.
|
Which of the following items is not a specific
monetary instrument used to settle sales?
a. | A credit sale | b. | A bill of exchange | c. | A
draft | d. | A promissory note
|
|
|
|
10.
|
How is the “receivables turnover”
calculated?
a. | Net sales x Average accounts
receivable | b. | Net sales/Average
accounts receivable | c. | Net sales +
Average accounts receivable | d. | Net sales -
Average accounts receivable |
|