• University of Southern Philippines Foundation, Lahug Main Campus

• ACCOUNTING 1

CEBU CPAR CENTER, INC.

RECEIVABLES - THEORY

1. Receivables denominated in a foreign currency should be

a. Translated to local currency using the exchange rate at the time the receivables arise

b. Shown at face value of the foreign currency

c. Translated to local currency using the exchange rate at balance sheet date

d. Translated to local currency using the exchange rate when the balance sheet is issued

2. Trade receivables are classified as current assets when they are reasonably expected to be

collected

a. Within one year

b. Within the normal operating cycle

c. Within one year or within the normal operating cycle whichever is shorter

d. Within one year or within the normal operating cycle whichever is longer

3. Nontrade receivables are classified as current assets only if they are reasonably expected to

be realized in cash

a. Within one year or normal operating cycle, whichever is shorter.

b. Within the normal operating cycle

c. Within one year or the normal operating cycle, whichever is longer

d. Within one year, the length of the operating cycle notwithstanding

4. Installments receivable arising from sales of household appliances should be classified as

a. Current assets

b. Noncurrent assets

c. Current assets; however, the amount not realizable within one year should be disclosed, if

material

d. None of these

5. In the case of long-term installments receivable (real estate installment sales) where a major

portion of the receivables will be collected beyond the normal operating cycle

a. The entire receivables are classified as current without disclosure of the amount not

currently due

b. The entire receivables are classified as noncurrent

c. Only the portion currently due is classified as current and the balance as noncurrent

d. The entire receivables are classified as current with disclosure of the amount not currently

due

6. Receivables from subsidiaries and affiliates, if significant should be classified as

a. Current assets

b. Noncurrent assets

c. Either as noncurrent or current depending on the expectation of realizing them within one

year or over one year

d. Intangible assets

7. Receivables from officers, directors and employees for goods sold or services rendered in the

ordinary course of business

a. Are considered current if proper control is exercised in granting credit and the accounts are

currently collectible

b. Are not included in trade accounts receivable

c. Are included in current assets even if the receivables are actually loans and advances and

the collection is unlikely within a year

d. Are always classified as noncurrent

8. Credit balances in accounts receivable should be classified as

a. Current liability

b. Part of accounts payable

c. Noncurrent liability

d. Deduction from accounts receivable