Accoun ng exam 4, UARK| Ques ons and answers |
Updated RATED A+ | NEW 2026
The percent of receivables method; focuses on determining the best es mate of the allowance
balance, is o en called the _____
The balance sheet approach
The percent of revenue method, with its focus on determining the uncollec ble accounts
expense, is o en called the _______
Income statement approach
When a company allows a customer to "buy now and pay later" the company's right to collect
cash in the future is called an _____
Account receivable
When a longer credit term is needed or when a receivable is large, the seller usually requires
the buyer to issue a note reflec ng a credit agreement between the par es. The note specifies
the maturity datem intrest rate, and other credit terms. Receivables evidenced by such notes
are called _______
Notes receivable
Accounts and notes receivable are reported as _________ on the ________ side .
Assets on the le side
Repersents the amount of receivables a company es mates it will actually collect.
Net realizable value of accounts receivable (NRV)
Repersents a companies es mate of the amount of uncollec ble receivables
Allowance for doub-ul accounts
The par es frequently enter into a credit agreement. The terms are legally documented in a
Promissory note
Cost flow method that requires that one of the cost of the items purchased first be assigned to
cost of goods sold
First in-First out (FIFO)
, Cost flow method that requires that the cost of the items purchased Last be assigned to cost of
goods sold
Last in-First out ( LIFO)
First calculates the average cost per unit by dividing the total cost of the inventory available by
the total number of units available
Weighted average
FIFO produces the ____ gross margin; it also produces the ____ net income and the _____
income tax expense
Highest , Highest, Highest
LIFO results in recognizing the ___ gross margin, ____ net income, and the ___ income tax
expense
Lowest, Lowest, Lowest
Involves studying various rela onships between different items reported in a set of financial
statements
Ra o analysis
The person responsible for making payment on the due date is the ___
Maker (also some mes called the borrower or debtor)
The person to whom the note is made payable is the ____
Payee (also some mes called creditor or lender)
assets belonging to the maker are assigned as security to ensure that the principal will be paid
when due are called _____
Collateral
What is the purpose of allowance for doub-ul accounts
Match uncollec able/ bad debt expense to the same period as the related sales
Where is Net realizable value reported?
On the balance sheet
Liquidity refers to ______
how quickly assets are expected to convert to cash during normal opera ons
Updated RATED A+ | NEW 2026
The percent of receivables method; focuses on determining the best es mate of the allowance
balance, is o en called the _____
The balance sheet approach
The percent of revenue method, with its focus on determining the uncollec ble accounts
expense, is o en called the _______
Income statement approach
When a company allows a customer to "buy now and pay later" the company's right to collect
cash in the future is called an _____
Account receivable
When a longer credit term is needed or when a receivable is large, the seller usually requires
the buyer to issue a note reflec ng a credit agreement between the par es. The note specifies
the maturity datem intrest rate, and other credit terms. Receivables evidenced by such notes
are called _______
Notes receivable
Accounts and notes receivable are reported as _________ on the ________ side .
Assets on the le side
Repersents the amount of receivables a company es mates it will actually collect.
Net realizable value of accounts receivable (NRV)
Repersents a companies es mate of the amount of uncollec ble receivables
Allowance for doub-ul accounts
The par es frequently enter into a credit agreement. The terms are legally documented in a
Promissory note
Cost flow method that requires that one of the cost of the items purchased first be assigned to
cost of goods sold
First in-First out (FIFO)
, Cost flow method that requires that the cost of the items purchased Last be assigned to cost of
goods sold
Last in-First out ( LIFO)
First calculates the average cost per unit by dividing the total cost of the inventory available by
the total number of units available
Weighted average
FIFO produces the ____ gross margin; it also produces the ____ net income and the _____
income tax expense
Highest , Highest, Highest
LIFO results in recognizing the ___ gross margin, ____ net income, and the ___ income tax
expense
Lowest, Lowest, Lowest
Involves studying various rela onships between different items reported in a set of financial
statements
Ra o analysis
The person responsible for making payment on the due date is the ___
Maker (also some mes called the borrower or debtor)
The person to whom the note is made payable is the ____
Payee (also some mes called creditor or lender)
assets belonging to the maker are assigned as security to ensure that the principal will be paid
when due are called _____
Collateral
What is the purpose of allowance for doub-ul accounts
Match uncollec able/ bad debt expense to the same period as the related sales
Where is Net realizable value reported?
On the balance sheet
Liquidity refers to ______
how quickly assets are expected to convert to cash during normal opera ons
