1. )The adjusting entry to eliminate a credit balance in a receivable account or a debit balance in a payable account

a.decreases total receivables.

b. increases total receivables

c. choice (b) for a receivable account; choice (a) for a payable account

d. does not affect total receivables

2.) Accounts receivables are subsequently measured at their recoverable historical costs. which of the following methods of estimating uncollectible accounts is in conformance with the PFRSs?

a. allowance method

b. Direct write-off

c. a or b

d. none of these

3.) The amount computed under the percentage of credit sales method is the

a. bad debts expense for the period.

b. required balance of the allowance account.

c. a or b

d. none of these

4.) The amount computed under the percentage receivables and aging methods is the

a. bad debts expense for the period.

b. required balance of the allowance account.

c. a or b

d. none of these

5.) According to PFRSs, receivables except trade receivables, are initially recognized at

a. fair value

b. cost

c. present value

d. fair value direct transaction costs.

6.) Which of the following rates may be used to compute for the interest income receivables on a receivable?

a. stated rate

b. nominal rate

c. effective interest rate

d. coupon rate

7.) Which of the following rates may be used to compute for the interest receivables on a note receivable?

a. imputed rate of interest

b. current rate

c. yield rate

d. nominal rate

8.) A noninterest-bearing note

a. bears no effective interest rate.

b. has a specified principal but an unspecified interest rate.

c. does not result to any interest income.

d. has an unspecified principal and an unspecified interest.

9.) When a note receivable earns compound interest,

a. the principal is due at maturity but interests are due periodically.

b. it means that the note is a long-term asset.

c. both the principal and interest are due only at maturity date.

d. interest income on the note is computed using a very complex formula.

10.) When the contractual cash flows of a debt instrument measured at amortized cost are due in lump sum, the present value (PV) factor used to discount the future cash flows is

a. PV of $1

b. PV of ordinary annuity of $1

c. PV of an annuity due of $1

d. PV of a deferred annuity

11.) When the contractual cash flows of a debt instrument measured at amortized cost are due in installments and the first installment, the present value (PV) factor used to discount the future cash flows is

a. PV of $1

b. PV of ordinary annuity of $1

c. PV of an annuity due of $1

d. PV of an deferred annuity

12.) SEVELTE SLENDER Co. received a 3-year, 3%note receivable from one its customers. the current rate at the date of receipt of the note was 12%. SEVELTE should initially recognized the receivable at

a. face amount

b. present value.

c. appraised value

d. fair value less costs to sell

13.) MYTHICAL IMAGINARY Co. makes all of is sales on 30-day credit terms. During the period, MYTHICAL made a special sale to one of its customers, wherein the customer was extended a 9-month credit term. MYTHICAL received a $10M noninterest-bearing note on the sale. According to the PFRSs, MYTHICAL should initially recognize the receivable at (ignore practical expedient of PFRS 15)

a. face amount

b. present value

c. appraised value.

d. fair value less costs to sell.