Question 1

Mattel had net sales of $4,235 million and accounts receivable of $775 million. To one decimal, Mattel's days' sales uncollected was:

Accepted Answer

The answer of Mattel had net sales of $4,235 million...

Question 2

The days' sales uncollected ratio is used to:

Accepted Answer

The days' sales uncollected ratio is used to estimate how much time is likely to pass before cash receipts from credit sales equal the current amount of accounts receivable. It is a measure of the average number of days it takes for a company to collect payments from its customers.

Question 3

Quality of receivables refers to:

Accepted Answer

Quality of receivables refers to the likelihood of collection, indicating how probable it is that the receivables will be collected.

Question 4

Accounts receivable turnover is calculated by:

Accepted Answer

Accounts receivable turnover is calculated by dividing net sales by average accounts receivable, which measures how efficiently a company collects its receivables.

Question 5

Z-Mart had net sales of $31,500 and accounts receivable of $2,700. To one decimal, Z-Mart's days' sales uncollected was:

Accepted Answer

The answer of Z-Mart had net sales of $31,500 and...

Question 6

A contingent liability:

Accepted Answer

A contingent liability is an obligation that will only become a liability if an uncertain future event occurs. For example, a company may have a lawsuit pending against it, and if they lose the case, they will be required to make a payment. Until the outcome of the case is determined, the obligation is considered contingent.

Question 7

The buyer who pays cash for accounts receivable is called:

Accepted Answer

The buyer who pays cash for accounts receivable is called a factor. Factors provide cash to businesses in exchange for their outstanding invoices. This helps businesses improve their cash flow by providing immediate cash for invoices that may not be due for several weeks or months.

Question 8

Pledging receivables:

Accepted Answer

Pledging receivables allows firms to raise cash by using their receivables as collateral for a loan, while retaining ownership of the receivables.

Question 9

The days' sales uncollected ratio:

Accepted Answer

The days' sales uncollected ratio can be used for industry comparisons, period comparisons, and measures the time to collect receivables.

Question 10

TechCom has net sales of $435,000 and average accounts receivable of $87,000. What is the accounts receivable turnover for the period?

Accepted Answer

The accounts receivable turnover is calculated by dividing net sales by average accounts receivable. Thus, $435,000 / $87,000 = 5.

Question 11

The days' sales uncollected ratio:

Accepted Answer

The days' sales uncollected ratio measures the average number of days it takes a company to collect its accounts receivable. It is calculated by dividing the accounts receivable by the average daily sales. This ratio is used to evaluate the liquidity of receivables, which is important for a company's cash flow management. Option A and Option E have the ratio formula upside down. Option C and Option D are not relevant to the days' sales uncollected ratio.

Question 12

Dell had net sales of $8,739 million and average accounts receivable of $864 million.Its accounts receivable turnover was:

Accepted Answer

The answer of Dell had net sales of $8,739 million...

Question 13

Rotel purchased merchandise from TechCom on October 17, 2014. TechCom accepted Rotel's $4,800, 90-day, 10% note as payment. TechCom has a December 31st year end. What entry should TechCom make on January 15, 2015 when the note is honoured?

Accepted Answer

TechCom should make the following entry on January 15, 2015:
Debit: Cash $4,880 ($4,800 + ($4,800 x 10%))
Credit: Notes Receivable $4,800
Credit: Interest Revenue $80
The correct entry is option B.

Question 14

MixRecording Studios purchased $7,800 in electronic components from TechCom.MixRecording Studios signed a 60-day, 10% promissory note for $7,800. TechCom's journal entry to record the transaction should be:

Accepted Answer

The answer of MixRecording Studios purchased $7,800 in electronic components...

Question 15

The days' sales uncollected ratio is calculated by:

Accepted Answer

The days' sales uncollected ratio is calculated by dividing accounts receivable by net sales and then multiplying the result by 365 to convert it into days.

Question 16

Compaq's accounts receivable turnover rate was 5.7 for this year and 5.4 for last year.Dell's turnover rate was 6.8 for this year and 7 for last year. This means that:

Accepted Answer

Dell has a higher turnover rate for both years, indicating better efficiency in collecting accounts receivable. However, Compaq's turnover rate has improved from 5.4 to 5.7, meaning they are collecting their accounts receivable at a slightly higher rate than before. Therefore, Dell has the better turnover rate for both years and Compaq's turnover rate is improving.

Question 17

A note receivable discounted with recourse is:

Accepted Answer

When a note receivable is discounted with recourse, the original holder retains the risk of non-payment, making it a contingent liability.

Question 18

Accounts receivable turnover measures:

Accepted Answer

Accounts receivable turnover measures how often a company is able to convert its average accounts receivable balance into cash during the period.

Question 19

The recording of accounts receivable is linked to the:

Accepted Answer

The recording of accounts receivable is linked to the revenue recognition principle, as revenue is recognized when earned, which is typically when goods or services are delivered and when the right to receive payment exists, resulting in accounts receivable.

Question 20

Failure by the maker of a promissory note to pay the amount due at maturity is known as:

Accepted Answer

Dishonouring a note refers to the failure to pay the amount due at maturity, which is a breach of the terms of the promissory note. Protesting a note refers to the act of formally recording the failure to pay and presenting it to the parties involved, while depreciating and discounting a note are unrelated concepts in accounting and finance. Closing a note is not a recognized term in this context.

Quiz 8: Receivables

Mattel had net sales of $4,235 million and accounts receivable of $775 million. To one decimal, Mattel's days' sales uncollected was:

The days' sales uncollected ratio is used to:

Quality of receivables refers to:

Accounts receivable turnover is calculated by:

Z-Mart had net sales of $31,500 and accounts receivable of $2,700. To one decimal, Z-Mart's days' sales uncollected was:

A contingent liability:

The buyer who pays cash for accounts receivable is called:

Pledging receivables:

The days' sales uncollected ratio:

TechCom has net sales of $435,000 and average accounts receivable of $87,000. What is the accounts receivable turnover for the period?

The days' sales uncollected ratio:

Dell had net sales of $8,739 million and average accounts receivable of $864 million.Its accounts receivable turnover was:

Rotel purchased merchandise from TechCom on October 17, 2014. TechCom accepted Rotel's $4,800, 90-day, 10% note as payment. TechCom has a December 31st year end. What entry should TechCom make on January 15, 2015 when the note is honoured?

MixRecording Studios purchased $7,800 in electronic components from TechCom.MixRecording Studios signed a 60-day, 10% promissory note for $7,800. TechCom's journal entry to record the transaction should be:

The days' sales uncollected ratio is calculated by:

Compaq's accounts receivable turnover rate was 5.7 for this year and 5.4 for last year.Dell's turnover rate was 6.8 for this year and 7 for last year. This means that:

A note receivable discounted with recourse is:

Accounts receivable turnover measures:

The recording of accounts receivable is linked to the:

Failure by the maker of a promissory note to pay the amount due at maturity is known as: