76.A company has net sales of $1,200,000 and average accounts receivable of $400,000. What is its accounts receivable turnover for the period?
A. 0.20
B. 5.00
C. 20.0
D. 73.0
E. 3.0
Accounts Receivable Turnover = Net Sales/Average Accounts Receivable
Accounts Receivable Turnover = $1,200,000/$400,000 = 3.0
77.Pepperdine reported net sales of $8,600 million, net income of $126 million and average accounts receivable of $890 million. Its accounts receivable turnover is:
A. 37.8.
B. 9.7.
C. 68.3.
D. 7.1.
E. 51.7.
Accounts Receivable Turnover = Net Sales/Average Accounts Receivable
Accounts Receivable Turnover = $8,600/$890 = 9.7
78.Axle Co.'s accounts receivable turnover was 9.9 for this year and 11.0 for last year. Betterman's turnover was 9.3 for this year and 9.3 for last year. These results imply that:
A. Betterman has the better turnover for both years.
B. Axle has the better turnover for both years.
C. Betterman's turnover is improving.
D. Axle's credit policies are too loose.
E. Betterman is collecting its receivables more quickly than Axle in both years.
79.A company had net sales of $600,000, total sales of $750,000, and an average accounts receivable of $75,000. Its accounts receivable turnover equals:
A. .13
B. .80
C. 7.75
D. 8.00
E. 10.00
Accounts Receivable Turnover = Net Sales/Average Accounts Receivable
Accounts Receivable Turnover = $600,000/$75,000 = 8.00
80.A company had total sales of $600,000, net sales of $550,000, and an average accounts receivable of $95,000. Its accounts receivable turnover equals:
A. 6.1
B. 63.0
C. 54.8
D. 1.1
E. 6.3
Accounts Receivable Turnover = Net Sales/Average Accounts Receivable
Accounts Receivable Turnover = $550,000/$90,000 = 6.1
81.The matching principle, as applied to bad debts, requires:
A. That expenses be ignored if their effect on the financial statements is unimportant to users' business decisions.
B. The use of the direct write-off method for bad debts.
C. The use of the allowance method of accounting for bad debts.
D. That bad debts be disclosed in the financial statements.
E. That bad debts not be written off.
82.The materiality constraint, as applied to bad debts:
A. Permits the use of the direct write-off method when bad debts expenses are relatively small.
B. Requires use of the allowance method for bad debts.
C. Requires use of the direct write-off method.
D. Requires that bad debts not be written off.
E. Requires that expenses be reported in the same period as the sales they helped produce.
83.If the credit balance of the Allowance for Doubtful Accounts account exceeds the amount of a bad debt being written off, the entry to record the write-off against the allowance account results in:
A. An increase in the expenses of the current period.
B. A reduction in current assets.
C. A reduction in equity.
D. No effect on the expenses of the current period.
E. A reduction in current liabilities.
84.On October 17 of the current year, a company determined that a customer's account receivable was uncollectible and that the account should be written off. Assuming the allowance method is used to account for bad debts, what effect will this write-off have on the company's net income and total assets?
A. Decrease in net income; no effect on total assets.
B. No effect on net income; no effect on total assets.
C. Decrease in net income; decrease in total assets.
D. Increase in net income; no effect on total assets.
E. No effect on net income; decrease in total assets.
85.Gideon Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $2,000 uncollectible account of its customer, A. Hopkins. On July 10, Gideon received a check for the full amount of $2,000 from Hopkins. The entry or entries Gideon makes to record the write off of the account on May 3 is:
A. Accounts Receivable—A. Hopkins2,000
Allowance for Doubtful Accounts 2,000
B. Allowance for Doubtful Accounts2,000
Bad debts expense 2,000
C. Accounts Receivable—A. Hopkins2,000
Bad debts expense 2,000
Cash2,000
Accounts Receivable—A. Hopkins 2,000
D. Allowance for Doubtful Accounts2,000
Accounts Receivable—A. Hopkins 2,000
E. Cash2,000
Accounts Receivable—A. Hopkins 2,000