The Sale of Receivables by a Business: A Quick Way to Generate Cash for Operating Needs

Question 1

Correct! The sale of receivables by a business can be a quick way to generate cash for operating needs.

The sale of receivables by a business

can be a quick way to generate cash for operating needs.

Question 2

Correct! April 30 –13 = 17 days remaining in April + 31 days in May + 12 days in June = a maturity date of June 12.

A 60-day note receivable dated April 13 has a maturity date of

June 12.
Question 3

Correct! A company receiving an interest bearing note will debit the Notes Receivable account for the face value of the note.

A company that receives an interest bearing note receivable will

debit Notes Receivable for the face value of the note.

Question 4

Correct! When a note receivable is dishonored, Accounts Receivable is debited for the maturity value of the note, and Notes Receivable and Interest Revenue are credited.

When a note receivable is dishonored,

accounts receivable is debited if eventual collection is expected.

Question 5

Correct! All of the options are issues associated with accounts receivable except analyzing accounts receivable (“Accounts Receivables”).

Accounting issues associated with accounts receivable include all of the following except:

analyzing accounts receivable.

Question 6

Correct! Companies report accounts receivable at their cash (net) realizable value on the balance sheet (“Allowance Method for Uncollectible Accounts”).

Companies report accounts receivable on the balance sheet at:

cash (net) realizable value.
Question 7

Correct! The percentage-of-sales basis of estimating uncollectibles results in a better matching of expenses with revenues-an income statement viewpoint (“Bases Used for Allowance Method”).

The percentage-of-sales basis of estimating uncollectibles:

results in a better matching of expenses with revenues.