1. Which of the following is a trade receivable?

a. Claims against shipping company for damaged goods

or lost goods.

b. Advances to officers and employees.

c. Receivable arising from legal service rendered by a

law firm.

d. Accrued interest on notes receivable.

2. Which of the following items is not a trade receivable?

a. Customer's accounts on which post-dated checks are

held.

b. Claims from employees representing selling price of

goods sold under normal condition.

c. Claims from employees representing cash advances.

d. None of the above.

3. The credit balance in customer's accounts should be

a. Netted against the debit balances in other customer's

accounts.

b. Presented separately as currently liability.

c. Reported as a loss contingency.

d. Reported as a valuation account to receivables.

Trade accounts receivable - unadjusted to adjusted

4. Presented below are unaudited balances of selected

accounts of Drain Company as of December 31, 2020:

Debit (Credit)

Cash 500,000

Accounts receivable 1,300,000

Allowance for uncollectible

accounts

(8,000)

Goods amounting to P50,000 were invoiced for the account

of a customer recorded in January 2, 2021 with terms of net

60 days, FOB Shipping point. The goods were shipped to

customer on December 30, 2020. The bank returned on

December 29, 2020, a customer's check for P5,000 marked

"No sufficient funds" but no entry was made.

What is the correct balance of accounts receivable account

at December 31, 2020?

a. 1,355,000 c. 1,300,000

b. 1,347,000 d. 1,350,000

Method 1 - Percentage of ending accounts receivable

Numbers 5-6

Starboy Company has the following data relating to accounts

receivable for the year ended December 31, 2020:

Accounts receivable, January 1, 2020 480,000

Allowance for doubtful accounts, 1/1/20 19,200

Sales during the year, all on account, terms:

2/10, 1/15, n/30

2,400,000

Cash received from customers during the year 2,560,000

Accounts written off during the year 17,600

An analysis of cash received from customers during the year

revealed that P1,411,200 was received from customers availing

the 10-day discount period, P792,000 from customers availing

the 15-day discount period, P4,800 represented recovery of

accounts written off, and the balance was received from

customers paying beyond the discount period.

Starboy's year-end balance of allowance for doubtful accounts

was estimated to be 5% of the outstanding accounts receivable

as at December 31, 2020.

5. What was the balance of accounts receivable as at

December 31, 2020?

a. 265,600 c. 288,000

b. 270,400 d. 307,200

6. How much was Starboy's doubtful accounts expense for the

year ended December 31, 2020?

a. 8,000 c. 7,360

b. 7,120 d. 2,320

Method 2 - Percentage of sales

7. Estimation of uncollectible accounts receivable based on a

percentage of sales

a. Emphasizes measurement of net realizable value of

accounts receivable

b. Emphasizes measurement of bad debt expense

c. Emphasizes measurement of total assets

d. Is only acceptable for tax purposes

8. Which of the following methods of determining annual bad

debt expense best achieves the matching concept?

a. Percentage of sales

b. Percentage of ending accounts receivable

c. Percentage of average accounts receivable

d. Direct write off

9. A method of estimating doubtful accounts that emphasizes

asset valuation rather than income measurement is the

allowance method based on

a. Aging of accounts receivable

b. Direct write off

c. Gross sales

d. Credit sales less sales returns and allowance