ACG 3024-When using the percentage of sales method of estimating

ACG 3024-When using the percentage of sales method of estimating

Subject: Business    / Accounting
Question
Question 1

When using the percentage of sales method of estimating uncollectible accounts, any existing balance in the Allowance for Uncollectible Accounts account is ignored as long as the account has a credit balance after adjustment.

True

False

2 points

Question 2

In counting the days of interest on a note, the day the money is borrowed is omitted, but the day it is paid back is counted.

True

False

2 points

Question 3

Credit card companies absorb the loss from uncollectible accounts.

True

False

2 points

Question 4

Both a company’s credit terms and collection policies affect accounts receivable turnover.

True

False

2 points

Question 5

Generally, the older the account receivable, the lower the probability of collection.

True

False

2 points

Question 6

When a company collects sales taxes from customers, the amount of taxes collected represents a revenue.

True

False

2 points

Question 7

When a note is dishonored, the payee should debit Accounts Receivable for the maturity value of the note.

True

False

2 points

Question 8

When a note is dishonored, the payee will make an entry that includes a credit to:
A.    Accounts Receivable.
B.    Cash.
C.    Notes Receivable.
D.    Interest Payable.

2 points

Question 9

Maxwell issued to Prentice Co., a $2,400, 90-day, 12 percent note for the purchase of goods. The journal entry needed on Prentice Company’s books at the time of sale is:
A.
Notes Receivable    2,472
Sales        2,400
Interest Revenue        72
B.
Notes Receivable    2,400
Sales        2,400
C.
Notes Receivable    2,436
Sales        2,436
D.
Notes Receivable    2,400
Interest Revenue    72
Sales        2,472

2 points

Question 10

In estimating uncollectible accounts for a period, the percentage of sales method is the simplest method.

True

False

2 points

Question 11

The interest rate on notes receivable and notes payable is generally stated in annual terms.

True

False

2 points

Question 12

When a note is dishonored, the payee will make an accounting entry that includes a debit to Notes Receivable.

True

False

2 points

Question 13

An example of a contingent liability is:
A.    accounts payable.
B.    federal excise tax payable.
C.    salaries payable.
D.    potential loss from a lawsuit.

2 points

Question 14

The preemptive right refers to a stockholder’s right to receive dividends when they are declared by the board of directors.

True

False

2 points

Question 15

The date of record (of dividends) is the date established by the board of directors to determine who will receive a dividend.

True

False

2 points

Question 16

One of the most basic rights of the stockholder is the right to vote at stockholders’ meetings in person or by proxy.

True

False

2 points

Question 17

The market value of a stock depends on a number of factors, including investors’ expectations regarding the future performance of a corporation.

True

False

2 points

Question 18

When Retained Earnings is debited in a journal entry, a deficit exists.

True

False

2 points

Question 19

Which of the following statements regarding earnings per share is correct?
A.    Earnings per share and book value per share are equal.
B.    Earnings per share is calculated for all shares of stock that have been issued by the corporation.
C.    Only one earnings per share figure will appear on the income statement for each period.
D.    Earnings per share is equal to net income divided by the weighted-average number of common shares outstanding if the corporation has no preferred stock outstanding.

2 points

Question 20

Treasury stock is stock that:
A.    is apportioned to cover special projects such as the construction of a new building.
B.    has been issued but was reacquired by the corporation.
C.    must be offered to existing stockholders first in amounts proportional to their shareholdings of the issuer’s stock.
D.    has never been issued.

2 points

Question 21

The price-earnings ratio is computed by dividing the current market price per share of common stock by earnings per share.

True

False

2 points

Question 22

The charter is the contract between the state and the incorporators which gives the corporation its separate legal existence.

True

False

2 points

Question 23

The three significant cash dividend dates are the date of declaration, date of record, and date of payment.

True

False

2 points

Question 24

Which of the following is a characteristic of a corporation?
A.    Separate legal existence
B.    Shareholders may enter into a contract on behalf of the corporation
C.    Difficult transferability of ownership because of widely scattered ownership
D.    Full liability of owners to corporate creditors

2 points

Question 25

The three significant cash dividend dates are (in order) the dates of:
A.    declaration, record, and payment.
B.    record, distribution, and payment.
C.    declaration, record, and distribution.
D.    declaration, distribution, and payment.

2 points

Question 26

In The Profit’s A Stein Meats Receivables Video clip, Jamie, Marcus’ Portfolio Manager, uncovers that Stein Meats owes how much in liabilities?

$500,000

$7.8 million

$4 million

$2 million

2 points

Question 27

In The Profit’s A Stein Meats Receivables Video clip, it is easy to collect monies from customers who are past due.

True

False

2 points

Question 28

In The Profit’s A Stein Meats Receivables Video clip, what is the main reason that Stein Meats is struggling financially?

They don’t sell enough meat.

They extend credit to their customers and don’t collect from them.

Employees are stealing.

They owe too much to the bank.

2 points

Question 29

In The Profit’s A Stein Meats Receivables Video clip, how much money does Stein Meats have in the bank to pay their bills?

$30,000

$300,000

$500,000

$4 million

2 points

Question 30

In The Profit’s A Stein Meats Receivables Video clip, how much revenue does Stein Meats do annually?

$18 million

$4 million

$50 million

$1 million