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Chapter10Currentassetsotherthaninventories
MultipleChoice
Identifythechoicethatbestcompletesthestatementoranswersthequestion.

1.Whichprinciplestatesthatpositive(debit)balancesandnegative(credit)balancesin
accountsreceivablecannotunderanycircumstancesbecompensated?
a. Prudenceprinciple
b. Accrualprinciple
c. Nooffsettingprinciple
d. Matchingprinciple
ANSWER:C
Easy
POINTS: 0/1
REF:
page329

2.Whichcategoryofaccountsreceivablecorrespondstothefollowingtwocriteria?
oClaimisuncontestedbycustomer
oTheamountthatwillbecollectedisdoubtfulgiventhefinancialor
economicsituationofthedebtor
a. Ordinaryaccountsreceivable
b. Doubtfulaccountsreceivable
c. Disputedaccountsreceivable
d. Uncollectibleaccountsreceivable
ANSWER:B
Easy
POINTS: 0/1
REF:
page330

3.Inanagedbalance,inwhichorderarethebalancesofeachindividualcustomeraccount
reviewedandstructured?
a. Byduedate
b. Bydecreasingamount
c. Byincreasingamount
d. Byalphabeticalorder
ANSWER:A
Easy
POINTS: 0/1
REF:
page330

4.Whenthecollectibilityofanamountalreadyincludedinrevenueisuncertain,the
uncollectibleamount,ortheamountinrespectofwhichrecoveryhasceasedtobe
probable,ispreferably:
a. Notrecognized.
b. Recognizedasanadjustmentoftheamountofrevenueoriginallyrecognized.
c. Recordeddirectlyinretainedearnings.
d. Recognizedasanexpense.

ANSWER:D
Moderate
POINTS: 0/1
REF:
page332

5.Withwhichprincipledoestheallowancemethodconform?
a. Prudenceprinciple
b. Matchingprinciple
c. Nooffsettingprinciple
d. Consistencyprinciple
ANSWER:B
Moderate
POINTS: 0/1
REF:
page332

6.Provisionforbaddebtsisacontraassetaccount.
a. True
b. False
ANSWER:A
Easy
POINTS: 0/1
REF:
page332

7.Whichmethodisusedforreportingaccountsreceivableinthefinancialstatements?
a. Accountsreceivable(gross)100
Lessprovisionfordoubtfulaccounts70
Accountsreceivable(net)30

b.
c.

Accountsreceivable(netofprovisionfordoubtfulaccounts:70)30
GrossvalueProvisionsNetvalue
Accountsreceivable1007030

d. Alloftheabovemethodsareused.

ANSWER:D
Moderate
POINTS: 0/1
REF:
page334,335

8.Whichofthefollowingstatementsisfalse?
a. Cashequivalentsareshortterminvestments.
b. Cashequivalentsareinvestmentsthataresubjecttoasignificantriskofchanges
invalue.
c. Cashequivalentsarehighlyliquidinvestments.
d. Cashequivalentsareinvestmentsthatarereadilyconvertibleintoknown
amountsofcash.
ANSWER:B
Moderate
POINTS: 0/1
REF:
page341

9.Whichofthefollowingitemsisnotaspecificmonetaryinstrumentusedtosettlesales?
a. Acreditsale
b. Abillofexchange

c. Adraft
d. Apromissorynote
ANSWER:A
Moderate
POINTS: 0/1
REF:
page343

10.Howisthereceivablesturnovercalculated?
a. NetsalesxAverageaccountsreceivable
b. Netsales/Averageaccountsreceivable
c. Netsales+Averageaccountsreceivable
d. NetsalesAverageaccountsreceivable
ANSWER:B
Moderate
POINTS: 0/1
REF:
page347