1.

A kind of financial assets that represent a contractual right to receive cash or another financial
asset from another entity.
a. Inventories
b. Receivables
c. Investments
d. Cash

2. It refers to claims arising from sale of merchandise or services in the ordinary course of business.
a. Trade receivables
b. Nontrade receivables
c. Loan receivables
d. Subscription receivables

3. All are examples of nontrade receivables, except:

a. Accounts receivable
b. Advances to suppliers
c. Dividend receivable
d. Subscriptions receivable

4. The method of accounting for bad debts not permitted under IFRS.
a. Direct write-off method
b. Net method
c. Gross method
d. Allowance method

5. A method of estimating doubtful accounts which involves an analysis where the accounts are
classified into not due or past due.
a. Aging of the accounts receivables
b. Percent of accounts receivables
c. Percent of sales
d. None of the above

6. It is a claims supported by formal promises to pay usually in the form of notes.

a. Loans receivable
b. Accounts receivable
c. Subscriptions receivable
d. Notes Receivable

7. Notes receivable shall be measured initially at

a. Carrying amount
b. Face value
c. Present value
d. Future value

8. Another financial asset arising from a loan granted by a bank or other financial institution to a
borrower.
a. Accounts receivable
b. Nontrade receivable
c. Notes receivable
d. Loan receivable

9. Costs that should be included in the initial measurement of the loan receivable.
a. Direct origination costs
b. Indirect origination costs
c. Fixed costs
d. Distribution costs

10. Under the direct write off method, which account is debited when the company writes off one
of its accounts receivable?
a. Allowance for doubtful accounts
b. Accounts receivable
c. Bad debt expense
d. Cash

11. Credit balances in accounts receivables shall be classified as

a. Current liabilities
b. Part of accounts payable
c. Long term liabilities
d. Deduction from accounts receivable

12. Long-term notes receivables which normally bears interest or an interest which is unreasonably
low shall be recognized initially at
a. Face value
b. Discounted value
c. Maturity value
d. Current value

13. A method of estimating bad debts that focuses on the income statement whether rather than
the statement of financial position is the allowance method based on
a. Direct write-off method
b. Aging the trade accounts receivable
c. Credit sales
d. The balance in the trade accounts receivables

14. Receivables are classified as current assets if they are reasonably expected to be collected
a. within two years
b. within the normal operating cycle
c. within less than two years
d. within one year or within normal operating cycle, whichever is higher

15. Which method of recording bad debt loss in consistent with accrual accounting?
a. Allowance method
b. Direct write-off method
c. Percent of sales method
d. Percent of accounts receivable method

16. The phrases below are the technical knowledge of Accounts Receivable except..
a. To understand the gross method and net method of recording credit sales.
b. To identify the adjustments necessary in determining the net realizable value of accounts
payable.
c. To know the classification and presentation of receivables.
d. To know the accounting for doubtful accounts, worthless accounts written off and recoveries of
accounts written off.

17. ____________ relating to short-term receivables are NOT discounted because the effect of
discounting is usually immaterial.
a. Cash flows
b. Investments
c. Accounts
d. Financial Assets

18. For __________, the fair value is equal to the face amount or original invoice amount.
a. Long-term Receivables
b. Long-term Payables
c. Short-term Receivables
d. Long-term Payables

19. This is a method of recording credit sales wherein the accounts receivable and sales are
recorded at gross amount of the invoice.
a. Net Method
b. Allowance Method
c. Direct write-off Method
d. Gross Method

20. This method requires recognition of bad debt loss only when the accounts proved to be
worthless or uncollectible.
a. Net Method
b. Allowance Method
c. Direct write-off Method
d. Gross Method

21. Which method of recording bad debt loss is consistent with accrual recording?
a. Allowance method
b. Direct write off method
c. Percent of sales method
d. Percent of accounts receivable method

22. Estimation of uncollectible accounts receivable based on a percentage of sales

a. Emphasizes measurement of the 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

23. All of the following are characteristics of loans and receivables except
a. They have fixed or determinable payments.
b. They have unquoted.
c. The holder can recover substantially all of its investments unless there has been credit
deterioration.
d. The holder has demonstrated positive intention and ability to hold them to maturity

24. The interest on a non-interest bearing note is equal to

a. The excess of the face value over the present value
b. The excess of present value over the face value
c. The excess of the market value over the present value
d. Zero

25. If accounts receivable are pledged against borrowings, the amount of accounts receivable
pledged shall be
a. Excluded from total receivables with disclosure
b. Excluded from total receivables without disclosures
c. Included from total receivables with disclosure
d. Included from total receivables without disclosure

26. It is an unconditional promise in writing made by one person to another, signed by the maker,
engaging to pay on demand or at fixed determinable future time a sum certain in money to order
or to bearer.
a. Notes receivable
b. Promissory note
c. Interest-bearing notes receivable
d. Negotiable promissory note

27. If the notes receivable is measured initially at present value, short-term notes receivable shall
be measured at:
a. Face value
b. Present value
c. Book value
d. Annuity value

28. The amortized cost is the amount at which the note receivable is measured initially:
a. Minus principal repayment
b. Plus or minus cumulative amortization of any difference between the initial carrying amount
and the principal maturity amount
c. Minus reduction for impairment
d. All of the above
29. The fees charged by the bank against the borrower for the creation of the loan are known as:
a. Amortized cost
b. Finance charges
c. Loan fees
d. Origination fees

30. When measuring expected credited losses, an entity should consider the following except:
a. The time value of money
b. The probability-weighted outcome
c. Estimated future cash flows
d. Reasonable and supportable information

31. The following are characteristics of trade receivables except:

a. Includes accounts receivable and notes receivable
b. Claims arising from sources other than sale of merchandise or services in the ordinary
course of business
c. Claims arising from sales of merchandise or services in the ordinary course of business
d. Expected to be realized in cash within the normal operating cycle or one year, whichever is
longer

32. The following are examples of nontrade receivables except:

a. Advances to or receivables from shareholders, directors, officers or employees
b. Debit balance of creditor’s account
c. Receivables from customers
d. Claims receivables

33. Which method of recording bad debt loss is consistent with accrual accounting?
a. Allowance method
b. Percent of accounts receivable method
c. Direct write off method
d. Percent of sales method

34. In estimating the net realizable value of trade accounts receivable, the following deductions
are made except:
a. Allowance for freight charge
b. Allowance for sales return
c. Allowance for doubtful accounts
d. Allowance for purchase returns

35. When the allowance method of recognizing bad debts expense is used, the entries at the time
of collection of an account previously written off would
a. Decrease the allowance for doubtful accounts
b. Increase net income
c. Have no effect on the allowance for doubtful accounts
d. Have no effect on net income
36. The ideal measure of short-term notes receivable is the discounted value. Failure to follow
this practice usually does not make the statement of financial position misleading because
a. Most short-term notes receivable is non-interest bearing.
b. The allowance for uncollectible accounts includes a discount element.
c. The amount of the discount is not material.
d. Most notes receivable can be sold to a bank or factor.

37. Which method does not properly match expense and revenue?
a. Charging bad debts with a percentage of sales under the allowance method.
b. Charging bad debts using a percentage of accounts receivable under allowance method.
c. Charging bad debts using aging accounts receivable under the allowance method.
d. Charging bad debts as accounts are written off as uncollectible.

38. An entity uses the allowance method for recognizing doubtful accounts. The entry to record
the write off of a specific uncollectible account
a. Affects neither net income nor working capital.
b. Affects neither net income nor accounts receivable.
c. Decreases both net income and working capital.
d. Decreases both net income and accounts receivable.

39. When the allowance method of recognizing bad debt expense is used, the entries at the time
of collection of an account previously written off would
a. Decrease the allowance for doubtful accounts.
b. Increase net income
c. Have no effect on the allowance for doubtful accounts
d. Have no effect on net income

40. Accounting for the imputed interest on a noninterest bearing note receivable is an example of
what aspect of accounting theory
a. Matching
b. Verifiability
c. Substance over form
d. Accounting Entity

41. What is the normal journal entry for recording bad debt expense under the allowance
method?
a. Debit Allowance for Doubtful Accounts, Credit Accounts Receivable
b. Debit Allowance for Doubtful Accounts, Credit Bad Debt Expense
c. Debit Bad Debt Expense, Credit Allowance for Doubtful Accounts
d. Debit Accounts Receivable, Credit Allowance for Doubtful Accounts

42. The two methods of accounting for uncollectible receivables are the direct write-off method
and the
a. Percentage of Receivables Method
b. Aging of Credit Sales Method
c. Interest Method
d. Allowance Method

43. In which account are post-dated checks received classified?

a. Receivables
b. Prepaid Expenses
c. Cash
d. Payables

44.The following are categorized as nontrade receivables except;

a. advances to officers and employees
b. dividends and interest receivable
c. advances to subsidiaries
d. notes receivables

45. Nontrade receivables that are collectible within one year should classified as;
a. cash and cash equivalents
b. noncurrent asset
c. current asset
d. trade and other receivables

46. Write off should be treated as

a. a decrease in the amount of allowance for doubtful accounts
b. how bad debts expense should be treated
c. a debit only in Accounts receivable
d. the write off will not affect the allowance for doubtful accounts

47. If there is objective evidence that the receivables are impaired, an impairment loss shall
a. be disclosed in the notes to financial statements
b. be recognized in profit or loss
c. be recognized in other comprehensive income
d. not be recognized because it will not affect any account in the financial statements
48. When the note receivable is transferred (discounted) but requires derecognition, the entity
making the transfer should
a. remove the carrying value or amortized cost of the note receivable and any accrued
interest earned prior to the transfer
b. not remove the carrying value or amortized cost of the note receivable and any accrued
interest earned prior to the transfer
c. remove the carrying value or amortized cost of the note receivable only but recognize
the accrued interest earned prior to the transfer
d. not recognize the carrying value or amortized cost of the note receivable but remove the
accrued interest earned prior to the transfer