Accounts Receivable and Bad Debts Expense Quiz | AccountingCoach

Home About Quick Tour 1,553 Testimonials

Menu
Menu
PRO Features

Log In

Accounts Receivable and Bad

Debts Expense (Quiz)

Print this topic (PDF)

when you join PRO.

For multiple-choice and true/false questions, simply press or click on what you think is the correct
answer. For fill-in-the-blank questions press or click on the blank space provided.
If you have difficulty answering the following questions, learn more about this topic by reading our
Accounts Receivable and Bad Debts Expense (Explanation).

1. When a sale is made with the credit terms of 2/10, net 30, the "10" refers to the __________ period.

2. On June 1, $800 of goods are sold with credit terms of 1/10, n/30. How much should the seller expect to receive if
the buyer pays on June 8?
$720

$784

$792

$800

3. On June 1, $800 of goods are sold with credit terms of 1/10, n/30. On June 3 the customer returned $100 of the
goods. How much should the seller expect to receive if the buyer pays on June 8?
$692

$693

$700

$792

4. With credit terms of 2/10, n/30, the annual interest rate for paying in 10 days instead of 30 days is closest to
2%

24%

30%

36%

http://www.accountingcoach.com/accounts-receivable-and-bad-debts-expense/quiz[4/29/2015 3:47:44 PM]

Accounts Receivable and Bad Debts Expense Quiz | AccountingCoach

5. When the terms of a sale are FOB __________, ownership of goods will transfer to the customer at the customer's
dock.

6. The seller is responsible for the costs of shipping its goods to the buyer when the terms of the sale are FOB
Destination

Shipping Point

7. The buyer is responsible for the costs of shipping when goods are sold with the terms FOB
Destination

Shipping Point

8. When the Allowance for Doubtful Accounts appears on a company's financial statements, its balance will be a
__________ balance.
Debit

Credit

9. On which financial statement would you expect to find Allowance for Doubtful Accounts?
Balance Sheet

Income Statement

10. Which method of reporting losses on accounts receivable is required in the U.S. for income tax purposes?
Allowance

Direct Write-off

11. Which method of reporting losses on accounts receivable is to be used for financial reporting?
Allowance

Direct Write-off

12. The seller of goods that is offering credit terms of net 30 days will likely be one of its customer's __________
creditors until it receives payment.
Secured

Unsecured

13. After several years of operations, a company's Bad Debts Expense for a given year is likely to be the same as its
balance in Allowance for Doubtful Accounts.
True

False

14. A company estimates that $20,000 of its $500,000 of accounts receivable will be uncollectible. Its Allowance for
Doubtful Accounts presently has a credit balance of $8,000. The adjusting entry will include a __________ to the
Allowance for Doubtful Accounts.
Debit Of $12,000

Credit Of $12,000

Debit Of $28,000

Credit Of $28,000

http://www.accountingcoach.com/accounts-receivable-and-bad-debts-expense/quiz[4/29/2015 3:47:44 PM]

Accounts Receivable and Bad Debts Expense Quiz | AccountingCoach

15. A company estimates that $20,000 of its $500,000 of accounts receivable will be uncollectible. Its Allowance for
Doubtful Accounts presently has a credit balance of $18,000. The adjusting entry will include a __________ to Bad
Debts Expense.
Debit Of $2,000

Credit Of $2,000

Debit Of $38,000

Credit Of $38,000

16. A company estimates that $20,000 of its $500,000 of accounts receivable will be uncollectible. Its Allowance for
Doubtful Accounts presently has a debit balance of $3,000. The adjusting entry will include a __________ to
Allowance for Doubtful Accounts.
Debit Of $3,000
Debit Of $23,000

Credit Of $3,000

Debit Of $17,000

Credit Of $17,000

Credit Of $23,000

Use the following information for questions 17-21:

A company is expecting thousands of credit sales transactions each week with terms of net 30 days. The company
uses the allowance method and it prepares weekly financial statements. It believes that 0.001 of its credit sales will
be uncollectible. The company's credit sales for its first week of operations are $500,000. The credit sales for its
second week are $600,000.

17. The company's bad debts expense for its first week of operations will be $ __________.

18. The balance in Allowance for Doubtful Accounts at the end of the first week will likely be $ __________.

19. The company's bad debts expense for its second week of operations will be $ __________.

20. The amount of accounts receivable that you expect will be written off by the end of the company's second week of
operations is $ __________.

21. The balance in Allowance for Doubtful Accounts at the end of the second week of operations will likely be
$__________.

Use the following information for questions 22-25:

A company's Allowance for Doubtful Accounts has a credit balance of $25,000. It learns that one of its accounts
receivable amounting to $1,800 is worthless and needs to be written off.

22. Which account should be debited for $1,800 when writing off the account?

http://www.accountingcoach.com/accounts-receivable-and-bad-debts-expense/quiz[4/29/2015 3:47:44 PM]

Accounts Receivable and Bad Debts Expense Quiz | AccountingCoach

Allowance For Doubtful Accounts

Accounts Receivable

Bad Debts Expense

23. Which account should be credited for $1,800 when writing off the account?
Allowance For Doubtful Accounts

Accounts Receivable

Bad Debts Expense

24. Assuming that after the account is written off, the supplier receives full payment from the customer. Which account
will not be involved in the accounting entries made at the time when the payment is received?
Allowance For Doubtful Accounts

Accounts Receivable

Bad Debts Expense

25. Under the direct write off method, which account is debited when a company writes off one of its accounts
receivable?
Allowance For Doubtful Accounts

Accounts Receivable

Bad Debts Expense

26. Sorting a company's accounts receivable into classifications such as current, 1-30 days past due, and 31-60 days
past due is known as the __________ of accounts receivables.

27. The receivable turnover ratio is computed by dividing the net credit __________ for the year by the average
amount of accounts receivable during the year.

28. The days' sales in accounts receivable is calculated by dividing __________ days by the receivables turnover ratio
during the year.

29. A company's accounts receivable minus its allowance for doubtful accounts equals the net __________ value of
the accounts receivable.

30. In some industries, companies often sell their accounts receivable to a firm known as a __________.

Studies show that exam questions are a great way to learn and retain important information. Gain access
to our 1,700 accounting exam questions (and answers) when you upgrade to PRO.

Free Cheat Sheet

Receive our free 23-page Accounting Cheat
Sheet (PDF). Plus, stay up to date with the
latest accounting questions answered.

http://www.accountingcoach.com/accounts-receivable-and-bad-debts-expense/quiz[4/29/2015 3:47:44 PM]

Accounts Receivable and Bad Debts Expense Quiz | AccountingCoach

Join Our Newsletter

121,323 Subscribers

Accounting Coach
Like
Like

You like this.289,770

http://www.accountingcoach.com/accounts-receivable-and-bad-debts-expense/quiz[4/29/2015 3:47:44 PM]

Accounts Receivable and Bad Debts Expense Quiz | AccountingCoach

http://www.accountingcoach.com/accounts-receivable-and-bad-debts-expense/quiz[4/29/2015 3:47:44 PM]

Accounts Receivable and Bad Debts Expense Quiz | AccountingCoach

http://www.accountingcoach.com/accounts-receivable-and-bad-debts-expense/quiz[4/29/2015 3:47:44 PM]

Accounts Receivable and Bad Debts Expense Quiz | AccountingCoach

About the Author

After working as an accountant, consultant, and university accounting instructor for more than 25
years, Harold Averkamp formed AccountingCoach in 2003. His goal was to share his knowledge
and passion for teaching accounting with people throughout the world at a very low cost.
Read More...

Learn About a Career in Accounting

Career Home, Jobs & Opportunities, Degrees, CPA Requirements, CPA Exam, CMA and Other Certifications,
Resources

About us
About
us
Legal
Legal

http://www.accountingcoach.com/accounts-receivable-and-bad-debts-expense/quiz[4/29/2015 3:47:44 PM]

Accounts Receivable and Bad Debts Expense Quiz | AccountingCoach

Copyright 2004 - 2015 AccountingCoach, LLC. All rights reserved.

AccountingCoach is a registered trademark.

http://www.accountingcoach.com/accounts-receivable-and-bad-debts-expense/quiz[4/29/2015 3:47:44 PM]