F: Trade receivables include notes receivable and advances to officers and employees

T: Trade discounts are used to avoid frequent changes in catalogs and to alter prices for different
quantities purchased

T: In the gross method, sales discounts are reported as a deduction from sales

T: The net amount reported for short-term receivables is not affected when a specific account receivable
is determined to be uncollectible

F: The percentage-of-receivables approach of estimating uncollectible accounts emphasizes matching

over valuation of accounts receivable

F: The percentage-of-sales method results in a more accurate valuation of receivables on the balance
sheet

True 7. Companies record and report long-term notes receivable at the present value of the cash they
expect to collect

F: When the stated rate of interest exceeds the effective rate, the present value of the note receivable
will be less than its face value

T: For receivables sold with recourse, the seller guarantees payment to the purchaser if the debtor fails
to pay

F: When buying receivables with recourse, the purchaser assumes the risk of collectibility and absorbs
any credit loss