Beat Accounts receivable Multiple Choice Questions and Answers

31. Allowance for doubtful accounts is a contra-asset.
A) True
B) False
Ans: A

32. The process of classifying accounts receivable by age groups is called a subsidiary ledger.
A) True
B) False
Ans: B

33. A significant portion of receivables due from a group of customers with a shared characteristic that is likely to be affected in a similar manner by changes in economic conditions is referred to as a concentration of credit risk.
A) True
B) False
Ans: A

34. A controlling account is a general ledger account that summarizes the content of a specific subsidiary ledger.
A) True
B) False
Ans: A

35.  A method for accounting for uncollectible receivables in which no expense is recognized until individual accounts are determined to be worthless is the income statement method.
A) True
B) False
Ans: B

36. A person or entity who issues a promissory note is referred to as an issuer.
A) True
B) False
Ans: B

37. When using the balance sheet method of estimated uncollectible accounts, the amount determined to be uncollectible is the amount that will be reported as bad debts expense on the income statement.
A) True
B) False
Ans: B

38. Selling a note receivable prior to its maturity date is referred to as the discount on notes receivable.
A) True
B) False
Ans: B

39. Conservatism avoids overstatement of financial strength and earnings.
A) True
B) False
Ans: A

40. Which is the appropriate way to disclose the credit card expense on the income statement?
  a. as an addition to sales
  b. as a selling expense
  c. as an administrative expense
  d. as part of cost of goods sold
Ans: b

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