Accounting for Receivables

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

• discount

• trade

• special

• tax

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

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

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

• shipping point

• destination

• mail point

• ASAP

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

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

• debit

• credit

On which financial statement would you expect to find Allowance for Doubtful Accounts?

• balance sheet

• income statement

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

• allowance

• direct write-off

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

A company estimates that $20,000 of its $500,000 of account 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