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MC1 Receivable from officers, employees, or affiliated companies should be reported in the

statement of financial position as
a. current assets, if collectible within twelve months.
b. non-current assets only.
c. trade notes and accounts receivable if they otherwise qualify as current assets.
d. offsets to capital.
MC2 Which of the following is not a valid basis for using trade discounts as adjustment to list
price?
a. To avoid frequent changes in price catalogs.
b. To encourage collection of account within a specified period.
c. To make price differentials among different classes of customers.
d. To encourage customers to buy in big quantities.
MC3 Under the allowance method of recording cash discounts, sales discounts are recorded
a. when offered at the date of sale
b. when the account is collected within the discount period
c. only when not taken within the discount period
d. when the customer pays beyond the discount period
MC4 If a company employs the gross method of recording accounts receivable from
customers, then sales discounts taken should be reported as
a. a deduction from sales in the statement of comprehensive income.
b. an item of “other expense” in the statement of comprehensive income.
c. a deduction from accounts receivable in determining the net realizable value of
accounts receivable.
d. a deduction from the cost of goods sold in the statement of comprehensive income.
MC5 If a company employs the net method of recording accounts receivable from customers,
then sales discounts not taken should be reported as
a. a deduction from sales in the statement of comprehensive income.
b. an item of other expense in the statement of comprehensive income.
c. an item of other income in the statement of comprehensive income.
d. a deduction from the gross accounts receivable to arrive at amortized cost.

respectively? a. Overstate. understate. None Decrease Increase Decrease Amortized cost of Accounts Receivable None Decrease Increase None . b. At face value of the note d. Overstate.000. What effects did this accounting for the note have on Evans’ profit for 2012. At fair market value of the property or note b. overstate. Evans reported this note as charge to notes receivable and a credit to sales revenue for P60.000 note receivable for merchandise sold. at what amount should the note be recorded at the date of exchange? a. understate. the entry to write off a customer’s account would have what effect on profit and amortized cost of accounts receivable? Profit a. overstate. understate b. Overstate. d. understate. at the carrying (book) value of the property MC7 At the beginning of 2012. Default or delinquency in interest or principal payment d. A downgrade of the debtor’s credit rating b. At maturity value of the note c.MC6 If a note is exchanged for property and no interest rate is stated. Evans company received a three-year-zero-interest-bearing P60. and its retained earnings at the end of 2014. overstate. no effect MC8 Which of the following events does not necessarily provide objective evidence that a receivable is impaired? a. The market rate for equivalent notes was 8% at that time. Significant financial difficulty of the debtor c. understate. understate. 2013. Overstate. Bankruptcy proceedings undertaken by the debtor MC9 When the company uses the allowance method or recognizing uncollectible accounts. c. no effect d. 2014. overstate c.

decrease the allowance for uncollectible accounts. decrease profit. The criteria for recognition and basis of measurement applied c. Material items of income and expense and gains and losses resulting from receivables d. The names of the debtors who defaulted on the payment of their loans or accounts b. MC12 A form of receivable financing which is equivalent to an absolute sale of accounts receivable is a. b. It is the amount of the desired credit balance of the allowance for uncollectible accounts to be reported in the year-end financial statements. MC11 When the allowance method of recognizing uncollectible accounts expense is used. It is the amount that should be added to the allowance for uncollectible accounts at year-end. b. c. d. c. the entries at the time of collection of an account previously written off would a. factoring. this new sum is the desired credit balance of the allowance account. It is the amount of uncollectible accounts expense for the year. assignment of accounts receivable. discounting of notes receivable. MC13 Which of the following is not a required disclosure for loans and receivables? a. the nature and amount of impairment loss recognized in profit or loss . When added to the total of accounts written off during the year. increase the allowance for uncollectible accounts. How would you describe the total of the amounts determined in this series of computation? a. plus 5% of the total peso balance of accounts from 61-120 days past due and so on. increase profit. d. c.MC10 Mary Quant Company prepares an accounts receivable aging schedule with a series of computation as follows: 2% of the total peso balance of accounts from 1-60 days past due. pledge of accounts receivable. b. d.

c. d. . maturity value less the discount at 18% for 75 days . b. maturity value less the discount at 18% for 45 days. c.MC14 Which of the following statement is true? a. MC16 A company writes off as uncollectible an account receivable from a bankrupt customer. decrease profit for the period. 15% interest-bearing note receivable is discounted to a bank at 18% after being held for 45 days. MC17 A 60-day. b. d. The proceeds received from the bank upon discounting would be a. The company has an adequate amount in its Allowance for Bad debts. Sales revenue is increased by a recovery of an account previously written off. c. maturity value plus the discount at 15%. maturity value less the discount at 15%. This transaction will a. Accounts receivable. When individual customers’ accounts have credit balances of material amounts. c. maturity value less the discount at 12%. A non-interest bearing promissory note is measured on the statement of financial position at face value less the amount of unamortized. c. b. maturity value less the discount at 18% for 120 days. Notes receivable. 12% interest-bearing note receivable was immediately discounted at a bank at 15%. MC15 The account credited when a note receivable is discounted with recourse is a. MC18 A 120-day. It is appropriate to measure the impairment on receivable based on recognized sales or other revenues. these amounts must be deducted from the debit balance in other customers’ accounts in the statement of financial position. have no effect on total current assets. The proceeds received from the bank upon discounting would be a. d. Liability on discounted notes. face value less the discount at 15%. decrease the amount of owners’ equity. allowance for discounted notes. d. b. d. decrease total current assets. maturity value less the discount at 15% for 75 days. b.

P147.000-585. at 40% above cost.000 c.000 Credit P450.4 = P630.000 Assuming merchandise was marked to sell as follows: Cash sales.500 Solution: P450.000 65. P12. P135.: Cost of sales Cash received from customers Cash P50.000 .000 x 1.MC19 The following data are given for Mazda. at 30% above cost and credit sales.000 Total P500.000 585.00 d. The balance of accounts receivable at the end of the period was a. P45.000 630. Inc.500 b.000 = P45.00 650. all of which are collectible.