As auditor you noticed that a long-term note payable of your client has no stated rate of interest , what amount should be used to recognize the liability? Select one: a. recorded at maturity value. b. recorded at the face amount. c. reported separately from other short-term notes payable. d. discounted to its present value.

As auditor you noticed that a long-term note payable of your client has no stated rate of interest , what amount should be used to recognize the liability? Select one: a. recorded at maturity value. b. recorded at the face amount. c. reported separately from other short-term notes payable. d. discounted to its present value.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 19MC: Which of the following is true of a maturity date? A. It must be calculated in days, not in months...

See similar textbooks

Similar questions

If receivables are hypothecated against borrowings, the amount of receivables involved should be A. Disclosed in the notes B. Excluded from the total receivables, with disclosure C. Excluded from the total receivables, with no disclosure D. Excluded from the total receivables and a gain or loss is recognized between the face value and the amount of borrowings
Which of the following statements concerning receivables is correct? Notes receivable are often listed after short-term investments. Both the gross amount of receivables and the allowance for doubtful accounts should be reported. O Interest revenue and gain on sale of notes receivable are shown under other revenues and gains. O All of these answer choices are correct.
Which of the following is not true about the discount on short-term notes payable? a. The Discount on Notes Payable account should be reported as an asset on the balance sheet. b. When there is a discount on a note payable, the effective interest rate is higher than the stated discount rate. c.The Discount on Notes Payable account has a debit balance. d. Discount on Notes Payable is a contra account to Notes Payable.
Which of the following is true of a maturity date? A. It must be calculated in days, not in months or years. B. It is the date when principal and interest on a note are to be repaid to the lender. C. It is the date of establishment of note terms between a lender and customer. D. It is not a characteristic of a note receivable.
Which of the following estimation methods considers the amount of time past due when computing bad debt? A. balance sheet method B. direct write-off method C. income statement method D. balance sheet aging of receivables method
Which method delays recognition of bad debt until the specific customer accounts receivable is identified? A. income statement method B. balance sheet method C. direct write-off method D. allowance method
Which of the following best describes the objective of estimating bad debt expense with the percentage of credit sales method? a.To estimate the amount of bad debt expense based on an aging of accounts receivable. b.To estimate bad debt expense based on a percentage of credit sales made during the period. c.To determine the amount of uncollectible accounts during a given period. d.To facilitate the use of the direct write-off method.
The write-off of defaulted notes receivable must be approved in writing by the accountant of the company. * Is it? A. TRUE B. FALSE
Which of the following is false about the discount on short-term notes payable? The Discount on Notes Payable account has a debit balance. The Discount on Notes Payable account should be reported as an asset on the balance sheet. If there is a discount on notes payable, the effective interest rate is higher than the stated discount rate. All of these are true
1. An entity determines that the credit risk on a loan receivable has not increased significantly since initial recognition. The entity should recognize loss allowance equal to a. the 12-month expected credit losses on the instrument. b. the lifetime expected credit losses on the instrument. c. sum of a and b d. none; credit losses should be recognized only when there is objective evidence of a loss event.
Which of the following is true? Short-term notes payable should be discounted at its present value, more so, if it constitutes a financing transaction and the imputed interest can be measured without undue cost or effort. Transaction costs of issuing financial liabilities are expensed outright. The present value of a serial note's principal is computed by using the PV of 1 as the present value factor. Notes payable are obligations supported by creditor's promissory notes.
Which of the following best describes the concept of the aging method of receivables? a.An accurate estimate of bad debt expense may be arrived at by multiplying historical bad debt rates by the amount of credit sales made during a period. b.Accounts receivable should be directly written off when the due date arrives and the customers have not paid the bill. c.Estimating the appropriate balance for the allowance for doubtful accounts results in the appropriate value for net accounts receivable on the statement of financial position. d.The precise amount of bad debt expense may be arrived at by multiplying historical bad debt rates by the amount of credit sales made during a period.