Yes No

1. Do you think that FedEx Kinko’s provides a large amount of its services to its customers on account? • Yes • No

2. Do most companies such as FedEx Kinko’s offer services and sales on credit? • Yes • No

3. Do companies such as FedEx Kinko’s collect on all of its accounts receivable transactions? • Yes • No

4. Do service companies and merchandising companies use the same rules for recording and reporting accounts receivable transactions? • Yes • No

5. Do small and large companies use the same rules for recording and reporting accounts receivable transactions? • Yes • No

6. Accounts receivable are the result of cash and credit sales. • True • False

7. The operating expense recorded from uncollectible receivables is called Bad Debt Expense. • True • False

8. Under the direct write-off method, Bad Debt Expense is not recorded until the customer’s account is determined worthless. • True • False

9. A closing entry reduces receivables to their net realizable value. • True • False

10. The net realizable value of the receivables is reported on the income statement. • True • False

11. A note is said to be dishonored when it is not paid in full at the maturity date. • True • False

12. Current assets are listed on the balance sheet in the order of their liquidity. • True • False

13. The receivable for which a formal, written instrument of credit is issued is a(n) • accounts receivable • notes receivable • interest receivable • trade receivable

14. The two methods of accounting for accounts that appear to be uncollectible are the • direct write-off method and allowance method • accrual method and allowance method • direct write-off method and cash basis method • accrual method and cash basis method

15. The two methods commonly used to estimate uncollectible accounts receivable at the end of a period are • percentage of total assets and percentage of sales • percent of sales and analysis of receivables • percent of current assets and percent of total revenues • analysis of net income and percent of sales

16. The Allowance for Doubtful Accounts is classified as a(n) • expense account • asset account • contra asset account • contra revenue account

17. A balance in the Allowance for Doubtful Accounts is considered when computing bad debts using the • direct write-off method • accrual method • percentage of sales method • analysis of receivables method

18. Using the allowance method, when a customer’s account is identified as uncollectible, the journal entry to record the write-off of this account includes a • debit to the Allowance for Doubtful Accounts • credit to the Allowance for Doubtful Accounts • debit to Accounts Receivable • debit to Bad Debts Expense

19. The direct write-off method • uses estimates based on percent of sales to account for bad debts • uses an allowance account • is used by small companies and companies with relatively few receivables • uses estimates based on analysis of receivables to account for bad debts

20. The interest on a $4,000, 10%, 1-year note receivable is • $4,000 • $400 • $40 • $4,040

21. The amount that is due on the due date of a notes receivable and represents the sum of the face value and the interest is called the • maturity value • face value • redeemed value • net realizable value

22. When a customer issues a note to replace an accounts receivable, the journal entry to record this transaction includes a • debit to Cash and credit to Accounts Receivable • debit to Accounts Receivable and credit to Notes Receivable • debit to Notes Receivable and credit to Accounts Receivable • debit to Notes Receivable and credit to Cash