Question 1

Millward Corporation's books disclosed the following information for the year ended December 31, 2011:
 
Millward's accounts receivable turnover is

Accepted Answer

A)  3.75 times. 
B)  4.35 times. 
C)  5.00 times. 
D)  5.80 times. 
A)  3.75 times. 
B)  4.35 times. 
C)  5.00 times. 
D)  5.80 times. C

Question 2

The information below is from the books of the Seminole Corporation on June 30:
   
Assuming no errors were made, compute the cash balance per books on June 30 before any reconciliation adjustments.

Accepted Answer

The answer of The information below is from the books...

Question 3

Carr Company sells specialized machinery and equipment. On January 1, 2011, the company sold equipment and received a two-year, $10,000 note with a 3 percent stated interest rate. Interest is payable each December 31, and the entire principal is payable December 31, 2012.
The equipment does not have a readily established market value. The market rate of interest for notes of this type and level of risk is 10 percent.
See Carr Company information above.
Required:
Prepare the entries on Carr Company's books to record the sale of the equipment.
Accounting Principles Board Opinion No. 21, "Interest on Receivables and Payables," requires that the note be accounted for at the market rate of interest appropriate for the transaction. In this case, that rate is 10 percent.

Accepted Answer

The present value of the note is computed as follows:
   The appropriate journal entries are as follows:

Question 4

The following information is available for Farr Company relative to 2011 operations:
 
What is Farr Company's accounts receivable balance at December 31, 2011?

Accepted Answer

A)  $82,000 
B)  $62,000 
C)  $20,000 
D)  $146,000 
A)  $82,000 
B)  $62,000 
C)  $20,000 
D)  $146,000

Question 5

When the allowance method of recognizing bad debt expense is used, the entry to record the write-off of a specific uncollectible account would decrease

Accepted Answer

A)  allowance for doubtful accounts. 
B)  net income. 
C)  net realizable value of accounts receivable. 
D)  working capital. 
A)  allowance for doubtful accounts. 
B)  net income. 
C)  net realizable value of accounts receivable. 
D)  working capital.

Question 6

In preparing a bank reconciliation, interest paid by the bank on the account is

Accepted Answer

A)  added to the bank balance. 
B)  subtracted from the bank balance. 
C)  added to the book balance. 
D)  subtracted from the book balance. 
A)  added to the bank balance. 
B)  subtracted from the bank balance. 
C)  added to the book balance. 
D)  subtracted from the book balance.

Question 7

The Eric Manufacturing Company received its bank statement for the month ending May 31. The bank statement indicates a balance of $32,400. The cash account as of the close of business on May 31 has a balance of $8,350. In reconciling the balances, the following items are discovered.
   
Prepare a bank reconciliation statement. (Use the format of reconciling bank and depositor figures to corrected cash balance.)

Accepted Answer

The answer of The Eric Manufacturing Company received its bank...

Question 8

Estimation of uncollectible accounts receivable based on a percentage of sales

Accepted Answer

A)  emphasizes measurement of the net realizable value of accounts receivable. 
B)  emphasizes measurement of bad debt expense. 
C)  emphasizes measurement of total assets. 
D)  is only acceptable for tax purposes. 
A)  emphasizes measurement of the net realizable value of accounts receivable. 
B)  emphasizes measurement of bad debt expense. 
C)  emphasizes measurement of total assets. 
D)  is only acceptable for tax purposes.

Question 9

The entry
 
Would be made when

Accepted Answer

A)  a customer pays its account balance. 
B)  a customer defaults on its account. 
C)  a previously defaulted customer pays its outstanding balance. 
D)  estimated uncollectible receivables are too low. 
A)  a customer pays its account balance. 
B)  a customer defaults on its account. 
C)  a previously defaulted customer pays its outstanding balance. 
D)  estimated uncollectible receivables are too low.

Question 10

Which of the following accounts isnot affected when an account receivable written off as uncollectible is unexpectedly collected?

Accepted Answer

A)  Cash 
B)  Accounts Receivable 
C)  Bad Debt Expense 
D)  Allowance for Bad Debts 
A)  Cash 
B)  Accounts Receivable 
C)  Bad Debt Expense 
D)  Allowance for Bad Debts

Question 11

In preparing a monthly bank reconciliation, which of the following items would be added to the balance reported on the bank statement to arrive at the correct cash balance?

Accepted Answer

A)  Outstanding checks 
B)  Bank service charge 
C)  Deposits in transit 
D)  A customer's note collected by the bank on behalf of the depositor 
A)  Outstanding checks 
B)  Bank service charge 
C)  Deposits in transit 
D)  A customer's note collected by the bank on behalf of the depositor

Question 12

Trask Corporation's checkbook balance on December 31, 2011, was $8,000. In addition, Trask held the following items in its safe on December 31:
 
The proper amount to be shown as cash on Trask's balance sheet at December 31, 2011, is

Accepted Answer

A)  $7,600. 
B)  $8,000. 
C)  $8,600. 
D)  $9,750. 
A)  $7,600. 
B)  $8,000. 
C)  $8,600. 
D)  $9,750.

Question 13

An operating cycle

Accepted Answer

A)  is twelve months or less in length. 
B)  is the average time required for a company to collect its receivables. 
C)  is used to determine current assets when the operating cycle is longer than one year. 
D)  begins with inventory and ends with cash. 
A)  is twelve months or less in length. 
B)  is the average time required for a company to collect its receivables. 
C)  is used to determine current assets when the operating cycle is longer than one year. 
D)  begins with inventory and ends with cash.

Question 14

Gekko, Inc. reported the following balances (after adjustment) at the end of 2011 and 2010.
 
During 2011, Gekko wrote off customer accounts totaling $3,200 and collected $800 on accounts written off in previous years. Gekko's doubtful accounts expense for the year ending December 31, 2011 is

Accepted Answer

A)  $1,500. 
B)  $2,400. 
C)  $3,000. 
D)  $3,900. 
A)  $1,500. 
B)  $2,400. 
C)  $3,000. 
D)  $3,900.

Question 15

The amount reported as "Cash" on a company's balance sheet normally should exclude

Accepted Answer

A)  postdated checks that are payable to the company. 
B)  cash in a payroll account. 
C)  undelivered checks written and signed by the company. 
D)  petty cash. 
A)  postdated checks that are payable to the company. 
B)  cash in a payroll account. 
C)  undelivered checks written and signed by the company. 
D)  petty cash.

Question 16

Which of the following is not a basic characteristic of a system of cash control?

Accepted Answer

A)  Use of a voucher system 
B)  Combined responsibility for handling and recording cash 
C)  Daily deposit of all cash received 
D)  Internal audits at irregular intervals 
A)  Use of a voucher system 
B)  Combined responsibility for handling and recording cash 
C)  Daily deposit of all cash received 
D)  Internal audits at irregular intervals

Question 17

On January 1, 2011, Standard Corporation sold specialized equipment originally costing $20,000 and having a book value of $16,000. The market value of the equipment was not readily determinable.
Standard received a $5,000 downpayment and a $10,000, 4 percent note payable in four equal annual installments beginning December 31, 2011. The current market rate on notes of a similar nature and risk is 10 percent.
Required:
Prepare the entries to record the sale of the equipment on January 1, 2011, and the first interest payment received on December 31, 2011.

Accepted Answer

The answer of On January 1, 2011, Standard Corporation sold...

Question 18

When the allowance method of recognizing bad debt expense is used, the entries at the time of collection of a small account previously written off would

Accepted Answer

A)  increase net income. 
B)  increase the allowance for doubtful accounts. 
C)  decrease net income. 
D)  decrease the allowance for doubtful accounts. 
A)  increase net income. 
B)  increase the allowance for doubtful accounts. 
C)  decrease net income. 
D)  decrease the allowance for doubtful accounts.

Question 19

On August 1, a firm assigned $20,000 of its $56,000 of accounts receivable. The finance company advanced 90% of the assigned accounts less a $2,000 fee. Interest is 12% and payable monthly on the beginning-of-period loan balance. A loan payment is remitted at the end of each month. Each payment includes principal and interest. The amount of each loan payment equals the cash collected on receivables during the month plus interest on the loan balance.
If $8,000 was collected on accounts receivable during August, the entry for the first loan payment would include a

Accepted Answer

A)  debit to Interest Expense of $180. 
B)  credit to Cash of $8,000. 
C)  credit to Account Receivable Assigned of $8,000. 
D)  debit to Notes Payable of $8,180. 
A)  debit to Interest Expense of $180. 
B)  credit to Cash of $8,000. 
C)  credit to Account Receivable Assigned of $8,000. 
D)  debit to Notes Payable of $8,180.

Question 20

Which of the following would not be classified as cash?

Accepted Answer

A)  Personal checks 
B)  Travelers' checks 
C)  Cashiers' checks 
D)  Postdated checks 
A)  Personal checks 
B)  Travelers' checks 
C)  Cashiers' checks 
D)  Postdated checks

Millward Corporation's books disclosed the following information for the year ended December 31, 2011: Millward's accounts receivable turnover is

The information below is from the books of the Seminole Corporation on June 30: Assuming no errors were made, compute the cash balance per books on June 30 before any reconciliation adjustments.

The following information is available for Farr Company relative to 2011 operations: What is Farr Company's accounts receivable balance at December 31, 2011?

When the allowance method of recognizing bad debt expense is used, the entry to record the write-off of a specific uncollectible account would decrease

In preparing a bank reconciliation, interest paid by the bank on the account is

Estimation of uncollectible accounts receivable based on a percentage of sales

The entry Would be made when

Which of the following accounts isnot affected when an account receivable written off as uncollectible is unexpectedly collected?

In preparing a monthly bank reconciliation, which of the following items would be added to the balance reported on the bank statement to arrive at the correct cash balance?

Trask Corporation's checkbook balance on December 31, 2011, was $8,000. In addition, Trask held the following items in its safe on December 31: The proper amount to be shown as cash on Trask's balance sheet at December 31, 2011, is

An operating cycle

Gekko, Inc. reported the following balances (after adjustment) at the end of 2011 and 2010. During 2011, Gekko wrote off customer accounts totaling $3,200 and collected $800 on accounts written off in previous years. Gekko's doubtful accounts expense for the year ending December 31, 2011 is

The amount reported as "Cash" on a company's balance sheet normally should exclude

Which of the following is not a basic characteristic of a system of cash control?

When the allowance method of recognizing bad debt expense is used, the entries at the time of collection of a small account previously written off would

Which of the following would not be classified as cash?

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, Pensions, Other Comp Issues

Earnings Per Share

Derivatives, Contingencies, Business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters

Exam 7: The Revenuereceivablescash Cycle

Millward Corporation's books disclosed the following information for the year ended December 31, 2011: Millward's accounts receivable turnover is

The information below is from the books of the Seminole Corporation on June 30: Assuming no errors were made, compute the cash balance per books on June 30 before any reconciliation adjustments.

The following information is available for Farr Company relative to 2011 operations: What is Farr Company's accounts receivable balance at December 31, 2011?

When the allowance method of recognizing bad debt expense is used, the entry to record the write-off of a specific uncollectible account would decrease

In preparing a bank reconciliation, interest paid by the bank on the account is

Estimation of uncollectible accounts receivable based on a percentage of sales

The entry Would be made when

Which of the following accounts isnot affected when an account receivable written off as uncollectible is unexpectedly collected?

In preparing a monthly bank reconciliation, which of the following items would be added to the balance reported on the bank statement to arrive at the correct cash balance?

Trask Corporation's checkbook balance on December 31, 2011, was $8,000. In addition, Trask held the following items in its safe on December 31: The proper amount to be shown as cash on Trask's balance sheet at December 31, 2011, is

An operating cycle

Gekko, Inc. reported the following balances (after adjustment) at the end of 2011 and 2010. During 2011, Gekko wrote off customer accounts totaling $3,200 and collected $800 on accounts written off in previous years. Gekko's doubtful accounts expense for the year ending December 31, 2011 is

The amount reported as "Cash" on a company's balance sheet normally should exclude

Which of the following is not a basic characteristic of a system of cash control?

When the allowance method of recognizing bad debt expense is used, the entries at the time of collection of a small account previously written off would

Which of the following would not be classified as cash?

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, Pensions, Other Comp Issues

Earnings Per Share

Derivatives, Contingencies, Business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

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