ACC $201-$ Exam $3$

MULTIPLE CHOICE $-$ Choose the one alternative that best completes the statement or answers the question.

The potential disadvantages of extending credit include all the following except:

A$)$ increased bad debt costs.

B$)$ customers buying too much.

C$)$ the need to hire employees to undertake collection efforts.

D$)$ higher wage costs in the accounting department.

enoismment

IBM signs an agreement to lend $$200,000$ to one of its customers to be repaid in one year at $5\%$ interest. IBM would record this loan as:

A$)$ Notes Payable.

B$)$ Accounts Receivable.

C$)$ Notes Receivable.

D$)$ Unearned Revenue.

Which of the following are similarities between a six$-$month note receivable and an account receivable? They both are:

A$)$ formal written contracts.

B$)$ interest bearing.

C$)$ current liabilities.

D$)$ current assets.

The adjusting entry to record the estimated bad debts in the period credit sales occur includes a debit to an:

A$)$ asset account and a credit to a liability account.

B$)$ expense account and a credit to an asset account.

C$)$ expense account and a credit to a revenue account.

D$)$ expense account and a credit to a contra$-$asset account.