CHAPTER 9: RECEIVABLES
1. SALESNotes Receivable and Accounts Receivable can also be called trade receivables.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-01 - 09-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
2. Receivables not currently collectible are reported in the investments section of the balance sheet.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-01 - 09-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
3. Trade receivables occur when two companies trade or exchange notes receivables.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-01 - 09-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
4. Other receivables include nontrade receivables such as loans to company officers.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-01 - 09-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 9: Receivables
5. Both Accounts Receivable and Notes Receivable represent claims that are expected to be collected in cash.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-01 - 09-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
6. When companies sell their receivables to other companies, the transaction is called factoring.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-02 - 09-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
7. Of the two methods of accounting for uncollectible receivables, the allowance method provides in
advance for uncollectible receivables.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-02 - 09-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 9: Receivables
8. A disadvantage of factoring is that the company selling its receivables immediately receives cash.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-02 - 09-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
9. Small companies can use either the direct write-off method or the allowance method.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-02 - 09-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
10. GAAP requires companies with a large amount of receivables to use the allowance method.
a. True
b. False
ANSWER: True
DIFFICULTY: Bloom’s:
Remembering
Easy
LEARNING OBJECTIVES: ACCT.WARD.16.09-02 - 09-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 - GAAP
ACCT.ACBSP.APC.12 - Receivables
Reporting ACCT.AICPA.FN.03 -
Measurement BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, Chapter 9: Receivables
11. The direct writeoff method records bad debt expense when an account is determined to be uncollectible.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-02 - 09-02
ACCT.WARD.16.09-03 - 09-03
ACCREDITING STANDARDS: ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
12. Generally accepted accounting principles do not normally allow the use of the direct write-off
method of accounting for uncollectible accounts.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-02 - 09-02
ACCT.WARD.16.09-03 - 09-03
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 - GAAP
ACCT.ACBSP.APC.12 - Receivables
Reporting ACCT.AICPA.FN.03 -
Measurement BUSPROG: Analytic
13. The direct write-off method records bad debt expense in the year the specific account receivable is
determined to be uncollectible.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-02 - 09-02
ACCT.WARD.16.09-03 - 09-03
ACCREDITING STANDARDS: ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1. SALESNotes Receivable and Accounts Receivable can also be called trade receivables.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-01 - 09-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
2. Receivables not currently collectible are reported in the investments section of the balance sheet.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-01 - 09-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
3. Trade receivables occur when two companies trade or exchange notes receivables.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-01 - 09-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
4. Other receivables include nontrade receivables such as loans to company officers.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-01 - 09-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 9: Receivables
5. Both Accounts Receivable and Notes Receivable represent claims that are expected to be collected in cash.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-01 - 09-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
6. When companies sell their receivables to other companies, the transaction is called factoring.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-02 - 09-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
7. Of the two methods of accounting for uncollectible receivables, the allowance method provides in
advance for uncollectible receivables.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-02 - 09-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 9: Receivables
8. A disadvantage of factoring is that the company selling its receivables immediately receives cash.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-02 - 09-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
9. Small companies can use either the direct write-off method or the allowance method.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-02 - 09-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
10. GAAP requires companies with a large amount of receivables to use the allowance method.
a. True
b. False
ANSWER: True
DIFFICULTY: Bloom’s:
Remembering
Easy
LEARNING OBJECTIVES: ACCT.WARD.16.09-02 - 09-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 - GAAP
ACCT.ACBSP.APC.12 - Receivables
Reporting ACCT.AICPA.FN.03 -
Measurement BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, Chapter 9: Receivables
11. The direct writeoff method records bad debt expense when an account is determined to be uncollectible.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-02 - 09-02
ACCT.WARD.16.09-03 - 09-03
ACCREDITING STANDARDS: ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
12. Generally accepted accounting principles do not normally allow the use of the direct write-off
method of accounting for uncollectible accounts.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-02 - 09-02
ACCT.WARD.16.09-03 - 09-03
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 - GAAP
ACCT.ACBSP.APC.12 - Receivables
Reporting ACCT.AICPA.FN.03 -
Measurement BUSPROG: Analytic
13. The direct write-off method records bad debt expense in the year the specific account receivable is
determined to be uncollectible.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.09-02 - 09-02
ACCT.WARD.16.09-03 - 09-03
ACCREDITING STANDARDS: ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
