Drebin Security Systems sold merchandise to a customer in exchange for a $50,000, five-year, noninterest-bearing note when an equivalent loan would carry 10% interest. Drebin would record sales revenue on the date of sale equal to:

Multiple Choice

• $50,000.

• The present value of $50,000 using a 10% interest rate.

• Zero.

• The future value of $50,000 using a 10% interest rate.

Long-term interest-bearing notes receivable issued at an unrealistically low interest rate will be:

Multiple Choice

• Accounted for on the installment basis.

• Recorded at an amount equal to the future cash flows.

• Discounted at an imputed interest rate.

• Recorded at the contract amount.

The allowance for uncollectible accounts is a:

Multiple Choice

• Quasi-liability account.

• Contra asset account.

• Deferred charge to expense.

• Deferred revenue account.

On November 10 of the current year, Cherokee Industries sold materials to a customer for $8,000 with credit terms 2/10, n/30. Cherokee uses the net method of accounting for sales discounts. What entry would Cherokee make on November 17, assuming the correct payment was received on that date?

Multiple Choice

• Cash	7,840
  Sales	160
  Accounts receivable		8,000

• Cash	7,840
  Accounts receivable		7,840

• Cash	8,000
  Sales discounts	160
  Accounts receivable		8,000
  Sales		160

• Cash	7,840
  Sales discounts	160
  Accounts receivable		8,000

Which of the following is not true regarding accounting for transfers of receivables under IFRS?

Multiple Choice

• Transfer of substantially all the risk and rewards of ownership is an important consideration.

• Transfers of receivables sometimes are treated as a sale of receivables.

• Transfers of receivables can be treated as a sale if the transferee is a QSPE.

• Transfers of receivables sometimes are treated as a secured borrowing.