Questions and Answers
Which of the following receivables would not be classified as an 'other receivable'?
Where is the Allowance for Doubtful Accounts reported on the balance sheet?
It is deducted from accounts receivable.
An aging of accounts receivable schedule is based on the premise that the longer the period an account remains unpaid, the greater the probability that it will eventually be collected.
False
A dishonored note is a note that is not paid in full at maturity.
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Interest on a 6-month, 10 percent, $10,000 note is calculated by multiplying $10,000 * 0.10 * 6/12.
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Bad debt expense and interest revenue are reported in the income statement under other revenues.
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Advances to employees are referred to as accounts receivable.
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The two key parties to a note are the maker and the payee.
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Which one of the following is not an accounting problem (issue) associated with accounts receivable?
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Interest is usually associated with what type of receivable?
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The account Allowance for Doubtful Accounts is classified as what type of account?
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Allowance for Doubtful Accounts is a contra account that is deducted from Accounts Receivable on the balance sheet.
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Other receivables include non-trade receivables such as loans to company officers.
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In a promissory note, the party to whom payment is to be made is called the maker.
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An aging schedule is prepared only for accounts receivables that have been past due for more than one year.
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Study Notes
Receivables Classification
- Notes receivable are not classified as "other receivable".
- Advances to employees do not qualify as accounts receivable.
Allowance for Doubtful Accounts
- Deducted from accounts receivable on the balance sheet.
- Serves as a contra account to Accounts Receivable.
Interest on Notes
- Interest calculation for a 6-month, 10%, $10,000 note: multiply $10,000 by 0.10 and then by 6/12.
- Interest is primarily associated with notes receivable.
Aging of Accounts Receivable
- Aging of accounts receivable does not imply that longer unpaid accounts have a higher probability of collection; this statement is false.
- Aging schedules are prepared for all accounts receivable, not just those overdue for more than one year.
Dishonored Notes
- A dishonored note is one that is not fully paid at maturity.
Financial Report Considerations
- Bad debt expense and interest revenue are not reported under other revenues in the income statement.
Key Parties in Promissory Notes
- The two main parties of a promissory note are the maker (who issues the note) and the payee (to whom payment is made).
Other Receivables
- Non-trade receivables, including loans to company officers, are considered as other receivables.
Accounting Issues
- Depreciating accounts receivable is not an accounting problem associated with accounts receivable.
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Description
Test your knowledge on accounting receivables with this quiz. Questions cover classifications, the allowance for doubtful accounts, and the aging schedule for receivables. Enhance your understanding of key concepts in financial accounting.
