1) The direct write-off method is required

a.where receivables are a large part of the current assets.

b.by GAAP.

c.for companies that factor their receivables.

d.for federal income tax purposes.

2)

The category of "Other Receivables"does not include

a.taxes receivable.

b.interest receivable.

c.officers and employees receivable.

d.trade receivables.

3)

Under the direct write-off method, when a specific account iswritten off,

a.net income will increase.

b.total assets will be unchanged.

c.total assets will decrease.

d.total assets will increase.

4)

The face value of a promissory note is

a.the amount for which the note is written plus the interest dueto the maturity date.

b.its realizable value.

c.the discounted value of the note.

d.the amount for which the note is written.

5)

The two methods of accounting for uncollectible receivables arethe direct write-off method and the __________ method.

a.equity

b.allowance

c.cost

d.interest

6)

The estimate of uncollectible accounts is based on all of thefollowing except

a.past experience.

b.monthly cash expenses.

c.forecasts of the future.

d.industry averages.

7)

A 90-day, 12% note for $10,000, dated May 1, is received from acustomer on account. Assuming a 360-day year, the maturity value ofthe note is

a.$11,200.

b.$10,300.

c.$9,700.

d.$10,000.

8)

The most common transaction for creating receivables is

a.selling merchandise or services on credit.

b.selling fixed assets on credit.

c.buying merchandise on credit.

d.buying fixed assets on credit.

9)

A primary weakness of the direct write-off method is that

a.the expense of a bad debt is not matched to the period thatgenerated the uncollectible sale amount.

b.it understates accounts receivable on the balance sheet.

c.it is based on estimates.

d.it is too difficult for many companies to use.

Answer rating: 100% (QA)

The detailed answer for the above question is provided below 1aWhere receivables are a large part of the current assets The direct writeoff method is used when receivables are a large part of the curr... View the full answer