30 TOP Accounts Receivable Multiple Choice Questions and Answers

List of top 30 most frequently asked accounts receivable multiple choice questions and answers pdf download free

Accounts Receivable Multiple Choice Questions and Answers List

  1. Accounts receivable (A/R) is one of a series of ________ transactions dealing with the billing of a customer for goods and services he/she has ordered.
  2. Companies can use their accounts receivable as collateral when obtaining a ________ (asset-based lending) or sell them through factoring.
  3. In most business entities this is typically done by generating an ________ and mailing or electronically delivering it to the customer, who in turn must pay it within an established timeframe called “creditor payment terms.”
  4. Pools or portfolios of accounts receivable can be sold in the capital markets through a ________.
  5. The change in the bad debt provision from year to year is posted to the bad debt expense account in the ________.
  6. On a company’s ________, accounts receivable is the money owed to that company by entities outside of the company.
  7. The two methods are not mutually exclusive, and some businesses will have a provision for doubtful debts and will also write off specific debts that they know to be bad (for example, if the debtor has gone into ________.)
  8. 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,
  9. Ninety-percent of Vogel Bird Seed’s 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:
  10. If EOQ = 360 units, order costs are $5 per order, and carrying costs are $.20 per unit, what is the usage in units?
  11. Costs of not carrying enough inventory include:
  12. Which of the following relationships hold true for safety stock?
  13. Increasing the credit period from 30 to 60 days, in response to a similar action taken by all of our competitors, would likely result in:
  14. The credit policy of Spurling Products 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 invoice. What would receivables be if all customers took the cash discount?
  15. An increase in the firm’s receivable turnover ratio means that:
  16. Receiving a required inventory item at the exact time needed.
  17. EOQ is the order quantity that over our planning horizon.
  18. A B2B exchange is a Internet marketplace that matches supply and demand by real-time auction bidding.
  19. Clark Garrison, Inc. uses an allowance for doubtful accounts. When they write off an uncollectible accounts receivable, total assets will
  20. Clark Garrison, Inc. uses an allowance for doubtful accounts. When they recover a previously written off account receivable, total assets will
  21. Brook Logan, Inc. uses the balance sheet approach for estimating bad debt expense. At year end, accounts receivable was valued at $200,000 and the allowance for doubtful accounts had a credit balance of $300. The allowance for doubtful accounts is estimated at 1% of accounts receivable. What is the bad debt expense for the year?
  22. If net credit sales for a given year are $400,000 and the average accounts receivable are $20,000, What is the accounts receivable turnover?
  23. If net credit sales for a given year are $600,000 and the average accounts receivable is $60,000, what is the average days to collect receivables?
  24. Bath Industries follows a policy of writing off accounts receivable balances when they are more than 120 days old, and all normal collection efforts have failed to result in the collection of the balance owing. On November 30, Bath Industries wrote off an accounts receivable of $450 from Felicity’s Feline Care Company. On December 3, Bath Industries received a cheque from Felicity’s in full payment of the overdue account. Bath Industries will record the receipt by:
  25. Imperial Grocery had net credit sales of $3,150,000 in 1999. It began the year with an accounts receivable balance of $78,200 and ended the year with a balance of $78,700. The accounts receivable turnover is:
  26. Catering Company borrowed $100,000 on December 5, 2000, by signing a 90-day note payable with annual interest of 9 percent. The amount of interest expense on this note for December 2000 is:
  27. Meat Packers International Company is the sole employer in the only city in a small province. Recent changes in government subsidies have caused Meat Packers to consider relocating to a larger city in a larger province. Mel Mott, owner of Mel’s Department Store, is concerned as to what will happen to the collectibility of the store’s accounts receivable if Meat Packers relocates and puts most of his customers out of work. This situation is called:
  28. Eastern Trucks sold five trucks to Continental Loggers on November 1 for a total of $175,000. Continental paid $25,000 cash and signed a 12-month note receivable. The face amount of the note was $163,500, which included interest on the note for 12 months. Eastern Trucks prepares adjusting entries annually and plans to amortize straight-line amortization for discount. The adjusting entry made at December 31, by Eastern Trucks year-end, is:
  29. The due date of a 60-day note receivable signed on April 17 is
  30. Accounts receivable are shown on the balance sheet at their net realizable value, which is defined as the balance in the accounts receivable account less the balance in the allowance for doubtful accounts account. When a company writes off an individual’s account as being uncollectible, the net realizable value on the balance sheet:

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