Bookkeeping Certification — Practice Exam
Receivables and bad debts: practice questions
Our Bookkeeping bank has 8 questions on this topic. Here are 4 of them with answers; the full mock exam draws from every topic, like the real one.
Question 1
What does an accounts receivable aging schedule show?
- Employees' ages
- Customer balances grouped by how long they've been outstanding
- Inventory by age
- Equipment by purchase date
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B. Customer balances grouped by how long they've been outstanding — Older balances are less likely to be collected.
Question 2
What is the accounts receivable subsidiary ledger?
- The bank statement
- A ledger with a separate account for each customer
- The general ledger
- A list of suppliers
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B. A ledger with a separate account for each customer — Its total should equal the AR control account.
Question 3
Credit sales are $100,000 and the company estimates 2% will be uncollectible. What is bad debt expense under the percentage-of-sales method?
- $98,000
- $20,000
- $2,000
- $200
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C. $2,000 — $100,000 × 2%.
Question 4
Under the allowance method, what is the entry to record estimated bad debts?
- Debit Accounts Receivable; credit Bad Debt Expense for the estimated amount
- Debit Bad Debt Expense; credit Allowance for Doubtful Accounts
- Debit Cash; credit Bad Debt Expense
- Debit Allowance; credit Accounts Receivable
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B. Debit Bad Debt Expense; credit Allowance for Doubtful Accounts — The allowance is a contra-asset.