4. Which of the following statements about promissory notes is incorrect? a. Interest is the revenue to the maker of the note b. The party making the promise to pay is the debtor c. The party to whom payment is to be made is the creditor d. The maturity date of the note is the date when final payment of the note is due

4. Which of the following statements about promissory notes is incorrect? a. Interest is the revenue to the maker of the note b. The party making the promise to pay is the debtor c. The party to whom payment is to be made is the creditor d. The maturity date of the note is the date when final payment of the note is due

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 20GI

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Which method delays recognition of bad debt until the specific customer accounts receivable is identified? A. income statement method B. balance sheet method C. direct write-off method D. allowance method
Which of the following terms does not refer to the amount that is paid by the note issuer to the creditors at the end of the life of the note? a. Face value b. Maturity value c. Carrying value d. Principal amount
8. When specified receivables are used to secure for a loan on a notification basis, which accounting treatment is required? Only a note to financial statement is required The borrower notifies the debtor that their receivables were assigned the borrower should not notify the debtor that their receivables were assigned Notify the debtor that their receivable was sold
19.Which of the following statements is incorrect? a. Trade receivables are recognized simultaneously with the recognition of related revenue when the criteria for revenue recognition are met. b. Under the gross price method, sales discounts are reported as a deduction from sales revenue. c. When accounts receivable are pledged against borrowing, the amount of accounts receivable pledged shall be included in the total receivables with disclosures. d. When discounting notes, the term discount period refers to the period of time that the note has been held by the endorser or payee; i.e. the period from the date of the note up to the date of discounting.
6. When unspecified receivables are used to secure for a loan, which accounting treatment is required? Only a note to financial statement is required The borrower notifies the debtor that their receivables were assigned the borrower should not notify the debtor that their receivables were assigned Notify the debtor that their receivable was sold
The write-off of defaulted notes receivable must be approved in writing by the accountant of the company. * Is it? A. TRUE B. FALSE
When referring to a note receivable or promissory note a.the note cannot be factored to another party b.the note may be used to settle an account receivable c.the note is not considered a formal credit instrument d.the maker is the party to whom the money is due
Which of the following accounting entries is correct? a) Record of issuance of bills receivable B) Cancellation of the rediscount transaction reserved for bills receivable at the beginning of the period NS) Posting of interest on notes receivable D) Register of notes receivable becoming worthless TO) Recording of the rediscount transaction for notes receivable at the end of the period
Which of the following is true when accounts receivable are factored without recourse? a. The transaction may be accounted for either as a secured borrowing or as a sale, depending upon the substance of the transaction. b. The financing cost (interest expense) should be recognized ratably over the collection period of the receivables. c. The receivables are used as collateral for a promissory note issued to the factor by the owner of the receivables. d. The factor assumes the risk of collectibility and absorbs any credit losses in collecting the receivables.
Which of the following is true when accounts receivable are hypothecated against borrowing? Exclude the hypothecated receivables to the total receivables without disclosures Disclose the hypothecated receivables in the notes to financial statement or notes thereto Add the hypothecated receivables to allowance for doubtful accounts Exclude the hypothecated receivables to the total receivables with disclosures
Which of the following is not true about the discount on short-term notes payable? a. The Discount on Notes Payable account should be reported as an asset on the balance sheet. b. When there is a discount on a note payable, the effective interest rate is higher than the stated discount rate. c.The Discount on Notes Payable account has a debit balance. d. Discount on Notes Payable is a contra account to Notes Payable.
If a note receivable is discounted without recourse a. the contingent liability may be disclosed b. liability for note receivable discounted is credited c. note receivable is credited d. the transaction shall be accounted for as a secured borrowing as opposed to a sale