6.Trade receivables are classified as current assets when they are reasonably expected to becollecteda. Within one yearb. Within the normal operating cyclec. Within one year or within the normal operating cycle whichever is shorterd. Within one year or within the normal operating cycle whichever is longer7.Nontrade receivables are classified as current assets only if they are reasonably expected tobe realized in casha. Within one year or normal operating cycle, whichever is shorter.b. Within the normal operating cyclec. Within one year or the normal operating cycle, whichever is longerd. Within one year, the length of the operating cycle notwithstanding8.Which is true concerning the balance sheet presentation of receivables?a. Trade receivables and nontrade receivables are shown separately.b. Nontrade receivables are presented as noncurrent assets.c. Trade accounts receivable and trade notes should be presented separately.d. Trade receivables and nontrade receivables, which are currently collectible, shall bepresented as one line item called "trade and other receivables".9.A discount given to a customer for purchasing a large volume of merchandise is typicallyreferred to asa. Quantity discountb. Cash discountc. Trade discountd. Size discount10.Which of the following is false in relation to cash and trade discounts?a. Cash discounts are reductions in the invoice price allowed when payment is made withinthe discount period while trade discounts are reduction from the list price or catalog pricein order to get the invoice price or amount actually charged to the buyer.b. Cash discounts are recorded but trade discounts are not recorded.c. The purpose of cash discounts is to encourage prompt payment while the purpose oftrade discounts is to encourage trading or promote sales.d. Both purchases with trade and cash discounts should be recorded at net.

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6. 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

6. 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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Bad Debts

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.

Question

6.
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
7.
Nontrade receivables are classified as current assets only if they are reasonably expected to
be realized in cash
a. Within one year or normal operating cycle, whichever is shorter.
b. Within the normal operating cycle
c. Within one year or the normal operating cycle, whichever is longer
d. Within one year, the length of the operating cycle notwithstanding
8.
Which is true concerning the balance sheet presentation of receivables?
a. Trade receivables and nontrade receivables are shown separately.
b. Nontrade receivables are presented as noncurrent assets.
c. Trade accounts receivable and trade notes should be presented separately.
d. Trade receivables and nontrade receivables, which are currently collectible, shall be
presented as one line item called "trade and other receivables".
9.
A discount given to a customer for purchasing a large volume of merchandise is typically
referred to as
a. Quantity discount
b. Cash discount
c. Trade discount
d. Size discount
10.
Which of the following is false in relation to cash and trade discounts?
a. Cash discounts are reductions in the invoice price allowed when payment is made within
the discount period while trade discounts are reduction from the list price or catalog price
in order to get the invoice price or amount actually charged to the buyer.
b. Cash discounts are recorded but trade discounts are not recorded.
c. The purpose of cash discounts is to encourage prompt payment while the purpose of
trade discounts is to encourage trading or promote sales.
d. Both purchases with trade and cash discounts should be recorded at net.

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