Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
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Question
Chapter 5, Problem 16MCQ
To determine
Receivables:
The receivables in the business refer to the amount of money which is due to be received from some other business or customer.
To select:
The true statement when the collection period of a company of account receivable is long which is not acceptable.
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Which one of the following statements is true if a company's collection period for accounts receivable is unacceptably long?
a.The company may need to borrow to acquire operating cash.
b.The company should expand operations with its excess cash.
c.Cash flows from operations may be higher than expected for the company's sales.
d.The company may offer trade discounts to lengthen the collection period.
Which of the following is/are a sign that a company can quickly turn its receivables into cash (may have more than one answer)?
Check All That Apply
a)A high average collection period.
b)A low average collection period.
c)A low receivables turnover ratio.
d)A high receivables turnover ratio.
Which of the following events will cause a company’s current ratio to decrease?
a.
The sale of inventory for credit (accounts receivable)
b.
Issuing stock for cash
c.
The sale of inventory for cash
d.
Paying off long-term debt with cash
Chapter 5 Solutions
Cornerstones of Financial Accounting
Ch. 5 - When is revenue recognized?Ch. 5 - When is a performance obligation satisfied?Ch. 5 - At what amount should sales revenue be recorded...Ch. 5 - Prob. 4DQCh. 5 - Prob. 5DQCh. 5 - Prob. 6DQCh. 5 - Prob. 7DQCh. 5 - Prob. 8DQCh. 5 - Prob. 9DQCh. 5 - Why is the direct write-off method not GAAP?
Ch. 5 - Prob. 11DQCh. 5 - Prob. 12DQCh. 5 - Prob. 13DQCh. 5 - How much interest will be due at maturity for each...Ch. 5 - A business borrows $1,000, signing a note that...Ch. 5 - Prob. 16DQCh. 5 - Describe what happens when receivables are...Ch. 5 - Prob. 18DQCh. 5 - Prob. 19DQCh. 5 - Prob. 20DQCh. 5 - Prob. 21DQCh. 5 - How may analyzing sales and receivables provide...Ch. 5 - Prob. 23DQCh. 5 - Prob. 1MCQCh. 5 - When is revenue from the sale of merchandise...Ch. 5 - What does the phrase, Revenue is recognized at the...Ch. 5 - Prob. 4MCQCh. 5 - Prob. 5MCQCh. 5 - Prob. 6MCQCh. 5 - Prob. 7MCQCh. 5 - All of the following are ways in which receivables...Ch. 5 - Which one of the following best describes the...Ch. 5 - If a company uses the direct write-off method of...Ch. 5 - Prob. 11MCQCh. 5 - Which of the following best describes the concept...Ch. 5 - The aging method is closely related to the a....Ch. 5 - Prob. 14MCQCh. 5 - Prob. 15MCQCh. 5 - Prob. 16MCQCh. 5 - Zenephia Corp. accepted a 9-month note receivable...Ch. 5 - Prob. 18MCQCh. 5 - Prob. 19MCQCh. 5 - ( Appendix 5A) Under the gross method, the seller...Ch. 5 - Service Revenue Kibitz Fitness received S30000...Ch. 5 - Service Revenue Softball Magazine Company received...Ch. 5 - Prob. 23CECh. 5 - Prob. 24CECh. 5 - Percentage of Credit Sales Clarissa Company has...Ch. 5 - Write-Off of Uncollectible Accounts The Rock has...Ch. 5 - Aging Method On January 1, 2019, Hungryman Inc....Ch. 5 - Aging Method On January 1, 2019, Smith Inc. has...Ch. 5 - Prob. 29CECh. 5 - Prob. 30CECh. 5 - Accounts Receivable Balance Beginning accounts...Ch. 5 - Accounts Receivable Balance Beginning accounts...Ch. 5 - Prob. 33CECh. 5 - Notes Receivable Metzler Communications designs...Ch. 5 - Notes Receivable Link Communications programs...Ch. 5 - Ratio Analysis The following information pertains...Ch. 5 - Ratio Analysis Diviney Corporations net sales and...Ch. 5 - Prob. 38CECh. 5 - Service Revenue H**R Wholesalers is a retailer...Ch. 5 - Service Revenue Melrose Milk Delivery provides...Ch. 5 - Prob. 41BECh. 5 - Prob. 42BECh. 5 - Prob. 43BECh. 5 - Write-Off of Uncollectible Accounts King...Ch. 5 - Aging Method Spotted Singer sells karaoke machines...Ch. 5 - Aging Method Ingrid Inc. has strict credit...Ch. 5 - Percentage of Credit Sales Method Ruby Red...Ch. 5 - Collection of Amounts Previously Written Off...Ch. 5 - Accounts Receivable Balance Hart Inc. began the...Ch. 5 - Accounts Receivable Balance XYZ Corp sells widgets...Ch. 5 - Accounts Receivable Balance Rays beginning and...Ch. 5 - Prob. 52BECh. 5 - Prob. 53BECh. 5 - Prob. 54BECh. 5 - Ratio Analysis Dobbys income statement lists net...Ch. 5 - Ratio Analysis Rose Corporation sells upscale...Ch. 5 - Prob. 57BECh. 5 - ( Appendix 5A) Sales Discounts Harry Gardner...Ch. 5 - ( Appendix 5A) Sales Discounts Ramsden Inc....Ch. 5 - Calculation of Revenue Wallace Motors buys and...Ch. 5 - Prob. 61ECh. 5 - Calculation of Revenue from Cash Collection...Ch. 5 - Prob. 63ECh. 5 - Sales and Sales Returns and Allowances Rubin...Ch. 5 - Average Uncollectible Account Losses and Bad Debt...Ch. 5 - Bad Debt Expense: Percentage of Credit Sales...Ch. 5 - Prob. 67ECh. 5 - Bad Debt Expense: Aging Method Glencoe Supply had...Ch. 5 - Aging Receivables and Bad Debt Expense Perkinson...Ch. 5 - Allowance for Doubtful Accounts At the beginning...Ch. 5 - Collection of Amounts Previously Written Off...Ch. 5 - Prob. 72ECh. 5 - Accounting for Notes Receivable On November 30,...Ch. 5 - Recording Notes Receivable: Issuance, Payment, and...Ch. 5 - Prob. 75ECh. 5 - Ratio Analysis The following information was taken...Ch. 5 - Ratio Analysis The following information was taken...Ch. 5 - Prob. 78ECh. 5 - Prob. 79APSACh. 5 - Prob. 80APSACh. 5 - Prob. 81APSACh. 5 - Prob. 82APSACh. 5 - Bad Debt Expense: Percentage of Credit Sales...Ch. 5 - Aging Method Bad Debt Expense Cindy Bagnal, the...Ch. 5 - Determining Bad Debt Expense Using the Aging...Ch. 5 - Accounting for Notes Receivable Yarnell...Ch. 5 - Prob. 87APSACh. 5 - Prob. 88APSACh. 5 - Prob. 79BPSBCh. 5 - Prob. 80BPSBCh. 5 - Prob. 81BPSBCh. 5 - Prob. 82BPSBCh. 5 - Prob. 83BPSBCh. 5 - Aging Method Bad Debt Expense Carol Simon, the...Ch. 5 - Determining Bad Debt Expense Using the Aging...Ch. 5 - Prob. 86BPSBCh. 5 - Prob. 87BPSBCh. 5 - Prob. 88BPSBCh. 5 - Ethics and Revenue Recognition Alan Spalding is...Ch. 5 - Prob. 89.2CCh. 5 - Prob. 89.3CCh. 5 - Prob. 90.1CCh. 5 - Prob. 90.2CCh. 5 - Prob. 90.3CCh. 5 - Prob. 91CCh. 5 - Prob. 92.1CCh. 5 - Prob. 92.2CCh. 5 - Prob. 93.1CCh. 5 - Prob. 93.2CCh. 5 - Prob. 94.1CCh. 5 - Prob. 94.2CCh. 5 - Prob. 95.1CCh. 5 - Prob. 95.2CCh. 5 - Prob. 95.3CCh. 5 - Prob. 95.4CCh. 5 - Prob. 95.5CCh. 5 - Prob. 95.6CCh. 5 - Prob. 95.7CCh. 5 - Comparative Analysis: Under Armour, Inc., versus...Ch. 5 - Prob. 96.2CCh. 5 - Prob. 96.3CCh. 5 - Prob. 96.4CCh. 5 - Prob. 96.5CCh. 5 - Prob. 96.6CCh. 5 - Prob. 97.1CCh. 5 - Prob. 97.2C
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Similar questions
- An increase in accounts receivable is deducted from net income to obtain operating cash flows because a. cash collections increased due to increasing sales. b. cash collections from customers were less than the revenues reported. c. cash collections decreased due to declining sales. d. cash collections from customers were greater than the revenues reported. e. None of these.arrow_forwardWhich of the following sentences regarding the statement of cash flows is false? The statement of cash flows describes the companys cash receipts and cash payments for a period of time. The statement of cash flows reconciles the beginning and ending cash balances shown on the balance sheet. The statement of cash flows reports cash flows in three categories: cash flows from business activities, cash flows from investing activities, and cash flows from financing activities. The statement of cash flows may be used by creditors to asses the creditworthiness of a company.arrow_forwardWhich of the following statements is CORRECT? a. The statement of cash flows shows where the firm's cash is located; indeed, it provides a listing of all banks and brokerage houses where cash is on deposit. b. The statement of cash flows shows how much the firm's cash--the total of currency, bank deposits, and short-term liquid securities (or cash equivalents)--increased or decreased during a given year. c. The statement of cash flows reflects cash flows from operations, but it does not reflect the effects of buying or selling fixed assets. d. The statement of cash flows reflects cash flows from continuing operations, but it does not reflect the effects of changes in working capital. e. The statement of cash flows reflects cash flows from operations and from borrowings, but it does not reflect cash obtained by selling new common stock.arrow_forward
- Which of the following is/are a sign that a company cannot quickly turn its receivables into cash (may have more than one answer)? Check All That Apply a)A low receivables turnover ratio. b)A low average collection period. c)A high receivables turnover ratio. d)A high average collection period.arrow_forwardIn your view, what would cause the cash book of an enterprise to disagree with the bank statement at the of month? Explain what you would include under Cost of sales of an enterprise during the preparation of final accounts for your organization?arrow_forward. Which one of the following best represents the transaction motive for holding cash? A. Buying extra inventory in response to an unexpected sale offered by a supplier B. Distributing the weekly paychecks C. Increasing the minimum cash balance for the firm's main bank account D. Unexpectedly purchasing a competitor's firm E. Holding cash in anticipation that the firm may need to close for a few days if floodwaters keep risingarrow_forward
- If the ending balance in accounts payable increases from one period to the next, which of the following is true? Cash payments to suppliers exceeded current period purchases. Cash payments to suppliers were less than current period purchases. Cash receipts from customers exceeded cash payments to suppliers. Cash receipts from customers exceeded current period purchases.arrow_forwardWhich of the following statements are correct?I. A company's choice of accounting principles for financial reporting purposes affects net cash flow for the accounting period.II. A company's choice of accounting principles for financial reporting purposes does not affect operating cash flow.III. If a company sells its receivables, this will increase operating cash flow.IV. If a company sells its receivables, this will increase financing cash flow Select one: A. I and III B. I,II and III C. II and IV D. I and IVarrow_forwardChoose from the following list of terms and phrases to best complete the following statements. a. Cash c. Outstanding check e. Cash over and short b. Cash equivalents d. Liquidity f. Voucher system 1. The category includes currency, coins, and deposits in bank accounts. 2. The term refers to a company’s ability to pay for its current liabilities. 3. The category includes short-term, highly liquid investment assets that are readily convertible to a known cash amount and sufficiently close to their due dates so that their market value will not greatly change.arrow_forward
- What does the Accounts Receivable Turnover measure? Group of answer choices a)The net realizable value of Accounts Receivable b)The dollar amount of funds tied up in Accounts Receivable c)How quickly a company collects Accounts Receivable d)The average days for cash collection.arrow_forwardA new manager of a retail company suggests that the company should prepare its Statement of Profit or Loss on the basis of cash receipts and cash expenditures (except for the acquisition of fixed assets, such as plant and equipment). He argues that managers, investors, creditors, and others are more interested in cash receipts and disbursements than in accrual-based accounting. Do you think he is correct? Explain.arrow_forwardWhen a company reports negative net cash flows from operations _____. a.ratio of accounts payable to annual financing expenses helps in assessing the survival of the company b.ratio of cash to monthly cash expenses helps in assessing the survival of the company c.ratio of equity to monthly cash expenses helps in assessing the survival of the company d.ratio of equity to annual cash expenses helps in assessing the survival of the companyarrow_forward
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