ACCOUNTING 17NB

A17NB_003A
RECEIVABLES jcr_cpa

THEORIES
1. Which of the following items is classified as a financial asset?
A. Ordinary shares of the issuer C. Accounts receivable
B. Loans payable by the borrower D. Inventory

2. For banks and financial institutions, receivables result primarily from

A. Loans C. Withdrawals
B. Deposits D. Credit sales

3. Under PAS 39, loans and receivables are financial assets with fixed or determinable amounts that are
A. Derivative, quoted C. Non-derivative, quoted
B. Derivative, non-quoted D. Non-derivative, non-quoted

4. Under PAS 39, loans and receivables are initially measured at

A. Fair value
B. Fair value plus transaction costs that are directly attributable to the acquisition
C. Maturity
D. Maturity value plus transaction costs that are directly attributable to the acquisition

5. Subsequent to the initial recognition, loans and receivable are measured at

A. Cost
B. Amortized cost using the straight line method
C. Amortized cost using the effective interest method
D. Fair value

6. Which of the following accounts shall be considered a form of receivable?

A. Accrued income C. Prepaid expense
B. Accrued expense D. Unearned income

7. Statement I: Trade receivables are classified as current assets if they are to be collected within one year or
within the normal operating cycle, whichever is shorter.
Statement II: Non-trade receivables are classified as current assets if they are to be collected within one
year or within the normal operating cycle, whichever is longer.
A. True , True B. True, False C. False, True D. False, False

8. Which of the following items is a trade receivable?

B. Claims in litigation C. Amounts due from customers
C. Loans to employees D. Receivables from affiliates

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9. The operating cycle
A. Measures the time elapse between cash disbursement for inventory and cash collection of the sales
price
B. Refers to the seasonal variations experienced by business entities
C. Should be used to classify asset and liabilities as current if it is less than one year
D. Cannot exceed a period of one year

10. On the Statement of financial position date, accounts receivable are generally reported at
A. Pawn value C. Maturity value
B. Net realizable value D. Market value

11. Statement I: Short-term notes, interest bearing or non-interest bearing, are stated at face value.
Statement II: Interest bearing long-term notes shall be stated at face value
Statement III: Non-interest bearing long-term notes shall be stated at discounted value
A. True, True, True C. True, False, False
B. False, True, True D. False, False, False

12. On the basis of substance over form, the interest on a non-interest bearing note is equal to
A. Zero
B. The excess of face value over the present value
C. The excess of present value over the face value
D. The excess of the market value over the present value

13. Receivables denominated in foreign currency should be translated to local currency using
A. Closing rate B. Average rate C. Historical rate D. Mortality rate

14. A credit balance in accounts receivable that resulted from over payments, advance payments, and returns
from customers should be classified as (CUSTOMER’S ACCOUNT WITH CREDIT BALANCE)
A. A current liability C. A contra asset
B. A long term liability D. A note disclosure

15. Which method of recording bad debt loss is consistent with the accrual accounting?
A. Allowance method
B. Direct write off method
C. Percent of sales method
D. Percent of accounts receivable method

16. The advantage of relating and entity’s bad debt experience to its accounts receivable is that this approach
A. Gives a reasonably accurate measurement of receivables in the statement of financial position.
B. Relates bad debt expense to the period of sale.
C. Is the only generally accepted method for measuring accounts receivable.
D. Makes estimate of uncollectible accounts necessary

17. Uncollectible account expense

A. Should not occur if a company properly investigates customers based on credit history
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 B. Is the amount of entity must pay whenever a customer fails to pay his or her account
C. Is the amount an entity must pay to a collection agent to recover amounts on overdue accounts
D. Represents the loss in accounts receivable that eventually turn out to be uncollectible

18. A method of estimating uncollectible accounts that emphasizes asset valuation rather than income
measurement is the allowance method based on
A. Aging of receivables C. Gross credit sales
B. Direct write-off D. Net credit sales

19. Under the allowance method, the entry to record the write-off of a specific account would
A. Decrease both accounts receivable and net income
B. Increases the allowance for uncollectible accounts and decreases net income
C. Decreases both accounts receivable and the allowance for uncollectible accounts
D. Decreases accounts receivable and increase the allowance for uncollectible accounts

20. Under the allowance method, entries at the time of collection of an account previously written-off would
A. Increase net income
B. Have no effect on net income
C. Decrease the allowance for doubtful accounts
D. Have no effect on the allowance for doubtful accounts

21. Under the direct write-off method, uncollectible accounts expense is recognized
A. As a percentage of net sales during the period
B. As a percentage of net credit sales during the period
C. As indicated by aging the accounts receivable at the end of the period
D. As specific accounts receivable are determined to be worthless

22. Which of the following is not a means of using receivables to obtain immediate cash?
A. Pledge and assignment of receivables C. Aging of accounts receivable
B. Factoring of accounts receivable D. Discounting of notes receivable

23. The amount of receivables that are hypothecated or pledged against borrowings should be
A. Excluded from total receivables with disclosure
B. Excluded from total receivables without disclosure
C. Included in total receivables with disclosure
D. Included in total receivables without disclosure

24. A financing arrangement whereby one party formally transfers its rights to accounts receivable to another
party in consideration for a loan.
A. Pledge B. Assignment C. Factoring D. Discounting

25. The amount of account receivable is included in total receivables with appropriate disclosures when
A. Pledge (yes); Assigned (yes); Factored (yes)
B. Pledge (yes); Assigned (yes); Factored (no)
C. Pledge (yes); Assigned (no); Factored (no)
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 D. Pledge (no); Assigned (no); Factored (no)

26. It is a predetermined amount withheld by a factor as a protection against customer returns, allowances and
other special adjustments
A. Equity in assigned accounts C. Factor’s holdback
B. Service charge D. Loss on factoring

27. When accounts receivables are factored,

A. Accounts receivable should be credited C. A contingent liability is ordinary created
B. Payable to factor is credited D. The factoring is accounted for as a borrowing

28. If a note receivable is discounted with recourse

A. A contingent liability does not exist
B. Note receivable discounted is credited
C. Liability for note receivable discounted is credited
D. Note receivable must be credited

29. Note receivable discounted without recourse shall be

A. Excluded from total receivables without disclosures of contingent liability
B. Excluded from total receivables with disclosures of contingent liability
C. Included in total receivables without disclosures of contingent liability
D. Included in total receivables with disclosures of contingent liability

30. When the accounts receivable of a company are sold outright to a company that normally buys account
receivable, the accounts receivable are said to have been
A. Pledged C. Factored
B. Assigned D. Collateralized

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