5 When interest is calculated for periods shorter than a year, the formula to calculate interest is:

A) I = P X R X T, where I = interest calculated, P = Principal, R = annual interest rate, and T = number of months.

B) I = P X R X T, where I = interest calculated, P = Principal, R = annual interest rate, and T = (number of months / 12 )------

C) I = P X R X T, where I = interest calculated, P = Principal, R = monthly interest rate, and T = (number of months / 12 )

D) I = (MV - P)/T, where I = interest calculated, MV = maturity value, P = principal and T = number of months.

6 On January 1, a company lends a corporate customer $80,000 at 6% interest, the amount of interest revenue that should be recorded for the quarter ending March 31 equals

A) 4,800

B) 1,200 -------

C) 400

D) 1,600

7 The following information is available:

Net accounts receivable, December 31, 2015 394,200

Net accounts receivable, December 31, 2015 435,900

Net credit sales for 2015 3,521,400

Net credit sales for 2016 3,795,300

The receivable turnover ratio for 2016 is closest to:

A) 8.93

B) 8.84

C) 8.71

D) 9.14 ------

8 What does a high receivable turnover ratio indicate?

A) customer payments are collected relativley soon after the sale has been made --------

B) sales are growing

C) credit sales are much greater than cash sales

D) cash collections are sluggish, taking longer to collect

9 Assume ABC sells its receivable to another company for immediate cash on a regular basis. how should the factoring fee be reported in the income statement?

A) Selling expense

B) Non-operating expense

C) sales return --------

D) Not at all

10 the direct write-off method for uncollectible accounts is required:

A) by the IRS

B) by GAAP

C) by IFRS

D) for external financial reporting