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Chapter 8 Quiz
Question 1
An aging of accounts receivable schedule is based on the premise that the
longer the period an account remains unpaid, the greater the probability that
it will eventually be collected.
Question 2
Allowance for Doubtful Accounts is a contra account that is deducted from
Accounts Receivable on the balance sheet.
Question 3
Under the allowance method, Bad Debt Expense is debited when an account is
deemed uncollectible and must be written off.
Question 4
Interest on a 6-month, 10 percent, $10,000 note is calculated by multiplying
$10,000 ´ 0.10 ´ 6/12.
Question 5
If a company has significant concentrations of credit risk, it must discuss this
risk in the notes to its financial statements.
Question 6
Interest is usually associated with
Question 7
On January 15, Nifty Company sells merchandise on account to Martinez
Associates for $3,000 with terms 3/10, n/30. On January 20, Martinez returns
merchandise worth $600 to Nifty. On January 24, payment is received from
Martinez for the balance due. What is the amount of cash received?
Question 8