1) Pledging receivables:  A

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1) Pledging receivables: 

A. Allows firms to raise cash.

B. Allows a firm to retain ownership of its receivables.

C. Does not transfer risk of bad debts to the lender.

D. Should be disclosed in the financial statements.

E. All of these.

72. A company factored $45,000 of its accounts receivable and was charged a 3% factoring fee. The journal entry to record this transaction would include a: 

A. Debit to Cash of $45,000, a debit to Factoring Fee Expense of $1,350, and credit to Accounts Receivable of $43,650.

B. Debit to Cash of $45,000 and a credit to Accounts Receivable of $45,000.

C. Debit to Cash of $43,650, a debit to Factoring Fee Expense of $1,350, and a credit to Accounts Receivable of $45,000.

D. Debit to Cash of $46,350 and a credit to Accounts Receivable of $46,350.

E. Debit to Cash of $45,000 and a credit to Notes Payable of $45,000.

73. The quality of receivables refers to: 

A. The creditworthiness of sellers.

B. The speed of collection.

C. The likelihood of collection without loss.

D. Sales turnover.

E. The interest rate.

74. The account receivable turnover measures: 

A. How long it takes to sell accounts receivable to a factor.

B. How often, on average, receivables are received and collected during the period.

C. The relation of cash sales to credit sales.

D. How long it takes to sell merchandise inventory.

E. All of these.

75. The accounts receivable turnover is calculated by: 

A. Dividing net sales by average accounts receivable.

B. Dividing net sales by average accounts receivable and multiplying by 365.

C. Dividing average accounts receivable by net sales.

D. Dividing average accounts receivable by net sales and multiplying by 365.

E. Dividing net income by average accounts receivable.

76. A company has net sales of $900,000 and average accounts receivable of $300,000. What is its accounts receivable turnover for the period? 

A. 0.20.

B. 5.00

C. 20.0

D. 73.0

E. 3.0

77. Dart reported net sales of $8,739 million and average accounts receivable of $864 million. Its accounts receivable turnover is: 

A. 0.90.

B. 10.1.

C. 36.1.

D. 50.0.

E. 3,686.

78. Tepsi's accounts receivable turnover was 9.9 for this year and 11.0 for last year. Craig's turnover was 9.3 for this year and 9.3 for last year. These results imply that: 

A. Craig has the better turnover for both years.

B. Tepsi has the better turnover for both years.

C. Craig's turnover is improving.

D. Craig's credit policies are too loose.

E. Craig's is collecting its receivables more quickly than Tepsi in both years.

79. A company had net sales of $600,000, total sales of $750,000, and an average accounts receivable of $75,000. Its accounts receivable turnover equals: 

A. .13

B. .80

C. 7.75

D. 8.00

E. 10.00

80. The matching principle precribes: 

A. That expenses be ignored if their effect on the financial statements is unimportant to users' business decisions.

B. The use of the direct write-off method for bad debts.

C. The use of the allowance method of accounting for bad debts.

D. That bad debts be disclosed in the financial statements.

E. That bad debts not be written off.