#1
Which of the following is a key component of accounts receivable?
Inventory
Cash
Amounts owed by customers
Fixed assets
#2
Which financial statement would typically include information about accounts receivable?
Balance sheet
Income statement
Statement of cash flows
Statement of retained earnings
#3
What is the purpose of a credit memo?
To increase accounts receivable
To decrease accounts receivable
To increase revenue
To decrease revenue
#4
What is the effect on the accounts receivable balance when a customer pays off their outstanding balance?
Decrease
Increase
Remains unchanged
Depends on the payment method
#5
What is the typical credit period offered to customers for credit sales?
30 days
60 days
90 days
120 days
#6
What is the primary risk associated with extending credit to customers?
Decreased sales
Increased bad debts
Lower inventory turnover
Higher operating expenses
#7
What is the primary purpose of offering credit sales to customers?
To increase inventory turnover
To improve cash flow
To attract new customers and increase sales
To reduce accounts receivable
#8
What is the formula to calculate the accounts receivable turnover ratio?
Net credit sales / Average accounts receivable
Total sales / Ending accounts receivable
Average accounts receivable / Net credit sales
Ending accounts receivable / Total sales
#9
What does Days Sales Outstanding (DSO) measure?
The number of days it takes to sell inventory
The average number of days to collect accounts receivable
The number of days it takes to pay accounts payable
The number of days it takes to receive inventory
#10
What is the journal entry to record a credit sale?
Debit Accounts Receivable, Credit Revenue
Debit Cash, Credit Accounts Receivable
Debit Revenue, Credit Accounts Receivable
Debit Revenue, Credit Cash
#11
Which of the following is a method to accelerate the collection of accounts receivable?
Offering longer payment terms
Delaying invoicing
Implementing early payment discounts
Increasing credit limits
#12
What is the aging of accounts receivable used for?
To calculate the bad debt expense
To estimate the ending balance of accounts receivable
To determine the creditworthiness of customers
To analyze the collection of accounts receivable by age
#13
Which financial ratio measures the liquidity of accounts receivable?
Current ratio
Quick ratio
Debt ratio
Accounts receivable turnover ratio
#14
Which method records revenue at the time of sale, regardless of when payment is received?
Cash basis accounting
Accrual basis accounting
Deferred revenue accounting
Cost accounting
#15
How does the allowance method account for potential bad debts?
It records bad debts as soon as they occur
It waits until bad debts are recovered before recording them
It estimates and records an allowance for bad debts
It ignores bad debts completely
#16
Under the aging method, how are accounts receivable classified?
Based on the date they were recorded
Based on the customers' credit scores
Based on their current market value
Based on the length of time they have been outstanding
#17
Which of the following is a contra account to accounts receivable?
Sales Returns
Revenue
Inventory
Accounts Payable
#18
What is the purpose of the direct write-off method for accounting bad debts?
To match expenses with revenues
To estimate bad debt expense
To comply with tax regulations
To accelerate the collection of accounts receivable
#19
What is the impact of increasing the allowance for doubtful accounts on the balance sheet?
Decreases assets
Increases liabilities
Increases equity
Decreases revenue
#20
Under which method are accounts receivable reported on the balance sheet?
Historical cost method
Net realizable value method
Fair value method
Accrual basis method