FAR — Financial Accounting & Reporting — Quiz 37

Questions in this quiz (10)

1. Which account classification describes Allowance for Doubtful Accounts?

   • Liability
   • Contra asset
   • Revenue
   • Expense

2. Which transaction decreases accounts receivable?

   • Credit sales
   • Customer collections
   • Issuing invoices
   • Recording revenue

3. Which financial statement reports accounts receivable?

   • Income statement
   • Balance sheet
   • Statement of cash flows
   • Statement of retained earnings

4. What is the purpose of estimating bad debts?

   • To eliminate receivables
   • To match expenses with related revenue
   • To increase profits
   • To eliminate estimates

5. Which best describes notes receivable?

   • Amounts owed to suppliers
   • Written promises to pay at a future date
   • Cash received immediately
   • Expenses incurred but unpaid

6. Which element is included in a promissory note?

   • Inventory quantity
   • Interest rate and maturity date
   • Sales tax percentage
   • Payroll amount

7. Which formula calculates interest on a note receivable?

   • Principal × Rate × Time
   • Revenue × Expense × Time
   • Assets × Liabilities × Equity
   • Sales × Rate × Profit

8. Which account is credited when interest revenue is earned?

   • Interest revenue
   • Notes receivable
   • Cash
   • Accounts receivable

9. Which account is debited when receiving a note receivable?

   • Accounts receivable
   • Notes receivable
   • Interest revenue
   • Expense

10. When a note receivable matures and is collected, which account increases?

    • Cash
    • Expense
    • Accounts payable
    • Inventory