1. Subsequent to initial recognition, accounts receivable should be carried at a. Face Value c. Maturity Value b. Net Realizable Value d. Present Value
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
1. Subsequent to initial recognition,
2. Loans and receivables are nonderivative financial assets a. With fixed or determinable payments that are not quoted in an active market. b. With fixed or determinable payments that are quoted in an active market. c. Without fixed or determinable payments that are not quoted in an active market. d. Without fixed or determinable payments that quoted in an active market.
3. Subsequent to initial recognition, loans and receivables are measured at a. Cost b. Amortized cost using
4. Trade receivables are classified as current assets when they are reasonably expected to be collected a. Within one year. b. Within the normal operating cycle. c. Within one year or within the normal operating cycle whichever is shorter d. Within one year or within the normal operating cycle whichever is longer
5. Receivable from subsidiaries and affiliates, if significant should be classified as a. Current assets b. Noncurrent assets c. Either as noncurrent or current depending on the expectation of realizing them within one year or over one year. d. Intangible assets.
6. A method of estimating uncollectible accounts that emphasizes asset valuation rather than income measurement is the allowance method based on a. Aging the receivables. c. Gross sales. b. Direct write-off. d. Credit sales less returns and allowances.
7. When the allowance method of recognizing uncollectible accounts is used, the entry to record the write-off of a specific account a. Decreases both accounts receivable and the allowance for uncollectible accounts. b. Decreases accounts receivable and increases the allowance for uncollectible accounts. c. Increases the allowance for uncollectible accounts and decreases net income. d. Decreases both accounts receivable and net income.
8. A company uses the allowance method to recognize uncollectible accounts expense. What is the effect at the time of the collection of an account previously written off on each of the following accounts?
Allowance for uncollectible accounts Uncollectible accounts expense a. No effect Decrease b. Increase Decrease c. Increase No effect d. No effect No effect
Another question:
What are two methods of recording accounts receivable transactions when a cash discount situation is involved? Which is more theoretically correct? Which is used in practice more of the time? Why?
What is the theoretical justification of the allowance method as contrasted with the direct writeoff method of accounting for
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