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ReSA TOA Receivables Quizzer

1.

Which of the following is classified as a financial


asset?
a. Ordinary shares of issuer
b. Loans payable by borrower
c. Accounts receivable
d. Inventory

8.

Under PAS 39, a loan receivable is measured on


balance sheet date at
a. Cost
b. Fair Value
c. Amortized cost using straight line method
d. Amortized cost using effective interest method

2.

Statement I: TRADE receivables are classified as


current assets if they are to be collected within one
year or within normal operating cycle, whichever is
shorter.
Statement II: NON-TRADE receivables are classified
as current assets if they are to be collected within one
year or within the normal operating cycle, whichever is
longer.
a. Both statements are true
b. Both statements are false
c. Only statement I is true
d. Only statement I is false

9.

Statement I: Interest bearing long-term receivables


shall be stated at face value.
Statement II: Non-interest bearing long-term
receivables shall be stated at present value.
Statement III: Short-term receivables, interest bearing
or not, are generally stated at face value.
a. All statements are true
b. Only statement I is true
c. Only statement II is false
d. Only statement III is false

3.

Which of the following items is a trade receivable?


a. Claims in litigation
b. Loans to employees
c. Amounts due from customers
d. Receivables from affiliates

4.

The normal operating cycle


a. Cannot exceed a period of one year
b. Refers to the seasonal variations experienced by
business entities
c. Should be used to classify asset and liabilities as
current if the cycle is less than one year
d. Measures the time elapsed between cash
disbursement for inventory and cash collection of
the sales price

5.

For banks and financial institutions, receivables arise


primarily from
a. Loans
b. Deposits
c. Withdrawals
d. Credit sales

6.

Under PAS 39, a loan receivable is a financial asset


with a fixed or determinable amount that is
a. Derivative, quoted
b. Derivative, non-quoted
c. Non-derivative, quoted
d. Non-derivative, non-quoted

7.

Under PAS 39, a loan receivable is initially measured


at
a. Fair value
b. Maturity value
c. Fair value plus transactions costs that are directly
attributable to the acquisition
d. Maturity value plus transactions costs that are
directly attributable to the acquisition

10. On the basis of substance over form, the interest on a


non-interest bearing note is equal to
a. Zero
b. Excess of face value over present value
c. Excess of present value over face value
d. Excess of market value over present value
11. When a note receivable is dishonored, it is debited to
a. Accounts receivable at face value
b. Dishonored notes receivable at face value
c. Accounts receivable at face value plus interest
and other charges
d. Dishonored note receivable at face value plus
interest and other charges
12. Receivables denominated in foreign currency should
be translated to local currency using
a. Closing rate
b. Average rate
c. Historical rate
d. Mortality rate
13. A credit balance in accounts receivable resulting from
overpayments, advanced payments and sales, returns
should be classified as (CUSTOMERS CREDIT
BALANCE)
a. A current liability
b. A long-term liability
c. A contra asset
d. A note disclosure
14. Uncollectible account expense:
a. Represents the loss in accounts receivable that
eventually turn out to be uncollectible
b. Is the amount an entity must pay whenever a
customer fails to pay his/her account
c. Should not occur if a company properly
investigates customers based on credit history
d. Is the amount an entity must pay to a collection
agent to recover amounts on overdue accounts

ReSA Receivables Quizzer

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15. A method of estimating uncollectible accounts that


emphasizes asset valuation rather than income
measurement is the allowance method based on
a. Aging of receivables
b. Direct write-off
c. Gross credit sales
d. Net credit sales
16. The advantage of relating bad debt experience to
accounts receivable is that this approach
a. Does not require knowledge of the balance in the
allowance for doubtful accounts
b. Gives a reasonably correct amount of receivables
in the balance sheet
c. Does not require estimates of uncollectible
accounts
d. Relates bad debt expense to the period of sale
17. Which method of recording bad debt loss is consistent
with accrual accounting?
a. Allowance method
b. Direct write-off method
c. Percent of sales method
d. Percent of accounts receivable method

22. Under the direct write-off method, uncollectible


accounts expense is recognized
a. As a percentage of net sales during the period
b. As a percentage of net credit sales during the
period
c. As specific accounts receivable are determined to
be worthless
d. As indicated by aging the accounts receivable at
the end of the period
23. Which of the following is not a means of using
receivables to obtain immediate cash?
a. Pledge and assignment of receivables
b. Factoring of accounts receivable
c. Discounting of notes receivable
d. Aging of accounts receivable
24. The amount of receivables that are hypothecated or
pledged against borrowings should be
a. Included in total receivables with disclosure
b. Included in total receivables without disclosure
c. Excluded from total receivables with disclosure
d. Excluded from total receivables without disclosure

18. Under the allowance method, the entry to recognize


bad debt expense
a. Increases net income
b. Decreases current assets
c. Has no effect on current assets
d. Has no effect on net income

25. A financing arrangement whereby one party formally


transfers its rights to accounts receivable to another
party in consideration for a loan
a. Pledge
b. Assignment
c. Factoring
d. Discounting

19. Under the allowance method, the allowance for


doubtful accounts would decrease when
a. Specific account receivable is collected
b. Account previously written off is collected
c. Specific uncollectible account is written off
d. Account previously written off becomes collectible

26. The amount of account receivable is included in total


receivables with appropriate disclosures when
a. Pledged (Yes); Assigned (Yes); Factored (Yes)
b. Pledged (Yes); Assigned (Yes); Factored (No)
c. Pledged (Yes); Assigned (No); Factored (No)
d. Pledged (No); Assigned (No); Factored (No)

20. Under the allowance method, the entry to record the


write-off of a specific account would
a. Decrease both accounts receivable and net
income
b. Increase the allowance for uncollectible accounts
and decrease net income
c. Decrease both accounts receivable and the
allowance for uncollectible accounts
d. Decrease accounts receivable and increase the
allowance for uncollectible accounts

27. The assignors equity in assigned accounts that is


required to be disclosed in the notes to the FS is
equal to the
a. Bank loan balance
b. Assigned accounts receivable
c. Bank loan balance minus the assigned accounts
receivable
d. Assigned accounts receivable minus bank loan
balance

21. Under the allowance method, entries at the time of


collection of an account previously written off would
a. Increase net income
b. Have no effect on net income
c. Decrease the allowance for doubtful accounts
d. Have no effect on the allowance for doubtful
accounts

28. When the accounts receivable of a company are sold


outright to a company that normally buys AR, the
accounts receivable are said to have been
a. Pledged
b. Assigned
c. Factored
d. Collateralized

ReSA Receivables Quizzer

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29. Factoring of receivables is usually done on a


a. With recourse, notification basis
b. Without recourse, notification basis
c. With recourse, non-notification basis
d. Without recourse, non-notification basis
30. ABC Company factored its receivables without
recourse with XYZ Bank. ABC received cash as a
result of this transaction which is best described as a
a. Loan from XYZ collateralized by ABCs accounts
receivable
b. Loan from XYZ to be repaid by the proceeds from
ABCs accounts receivable
c. Sale of ABCs accounts receivable to XYZ, with
the risk of uncollectible accounts retained
d. Sale of ABCs accounts receivable to XYZ with
the risk of uncollectible accounts transferred to
XYZ

36. Which of the following accounts is considered as a


form of receivable?
a. Accrued income
b. Accrued expense
c. Prepaid expense
d. Unearned income

Notes

31. It is a predetermined amount withheld by a factor as a


protection against customer returns, allowances, and
other special adjustments
a. Equity in assigned accounts
b. Service charge
c. Factors holdback
d. Loss on factoring
32. When accounts receivable are factored,
a. Payable to factor is credited
b. Accounts receivable should be credited
c. A contingent liability is ordinary created
d. It should be accounted fro as a borrowing
33. If a note receivable is discounted without recourse
a. Note receivable should be credited
b. Liability for note receivable discounted should be
credited
c. The transaction should be accounted for as a
borrowing as opposed to a sale
d. The contingent liability may be disclosed in either
a contra receivable or a note to the FS
34. Note receivable discounted with recourse should be
a. Include in total receivables with disclosure of the
contingent liability
b. Include in total receivables without disclosure of
the contingent liability
c. Exclude in total receivables with disclosure of the
contingent liability
d. Exclude in total receivables without disclosure of
the contingent liability
35. Which is a correct presumption regarding receivable
factoring and note discounting in the absence of a
contrary statement?
a. Receivable factoring (with recourse); Note
discounting (with recourse)
b. Receivable factoring (with recourse); Note
discounting (without recourse)
c. Receivable factoring (without recourse); Note
discounting (with recourse)
d. Receivable factoring (without recourse); Note
discounting (without recourse)

ReSA Receivables Quizzer

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