Question 1

Whether investments are reported as current assets or noncurrent assets depends on the company's intent.

Accepted Answer

A) True 
 B)False

Question 2

Where can the amounts needed to compute the accounts receivable turnover ratio be found?

Accepted Answer

A) The income statement 
B) The balance sheet 
C) The statement of cash flows 
D) Both a) and b). 
A) The income statement 
B) The balance sheet 
C) The statement of cash flows 
D) Both a) and b).

Question 3

The reason the allowance method of recognizing bad debts is used is primarily because it recognizes the maximum amount of write-off in each period.

Accepted Answer

A) True 
 B)False

Question 4

Music Corporation
The data below is for Music Corporation for 2015.  
-Refer to the data for Music Corporation.
If the aging approach is used to estimate bad debts, what is the balance in the Allowance for Doubtful Accounts after the bad debt expense adjustment?

Accepted Answer

A) $8,000 
B) $8,100 
C) $8,900 
D) $9,600 
A) $8,000 
B) $8,100 
C) $8,900 
D) $9,600

Question 5

Carson Enterprises' comparative balance sheets included accounts receivable of $220,300 at December 31, 2014, and $200,900 at December 31, 2015.Sales reported on Carson's 2015 income statement amounted to $2,350,000.What is the amount of cash collections that Carson will report in the Operating Activities category of its 2015 statement of cash flows assuming that the direct method is used?

Accepted Answer

A) $2,369,400 
B) $2,350,000 
C) $2,771,200 
D) $2,330,600 
A) $2,369,400 
B) $2,350,000 
C) $2,771,200 
D) $2,330,600

Question 6

On July 1, 2014, Falcon Company received a $20,000 promissory note for services from Jordyn Company.The annual interest rate is 5%.Principal and interest are paid in cash at the maturity date of June 30, 2013.
The effect on Falcon's financial statements on July 1, 2014 is as follows

Accepted Answer

A) Assets increase; owners' equity increases 
B) Assets decrease and owners' equity decreases 
C) Assets decrease 
D) No net change in assets 
A) Assets increase; owners' equity increases 
B) Assets decrease and owners' equity decreases 
C) Assets decrease 
D) No net change in assets

Question 7

The party that receives the payment due from a note is called the .

Accepted Answer

The answer of The party that receives the payment due...

Question 8

The maker of a note recognizes a note payable on the balance sheet and interest expense on its income statement.

Accepted Answer

A) True 
 B)False

Question 9

Lasiter Corp.reported net credit sales of $2,000,000 and cost of goods sold of $1,400,000 for 2014.On January 1, 2014, accounts receivable was $250,000.Amounts owed by customers increased by $20,000 during 2014.Rounding to two decimal places, what is Lasiter's accounts receivable turnover rate for 2014?

Accepted Answer

A) 8.33 
B) 8.00 
C) 7.69 
D) 7.41 
A) 8.33 
B) 8.00 
C) 7.69 
D) 7.41

Question 10

The following information was presented in the balance sheet of Gloria Company as of December 31, 2014:   Which one of the following statements is true?

Accepted Answer

A) Gloria expects that $1,700,000 of accounts receivable will be collected after year end. 
B) The balance in the Accounts Receivable account in Gloria's general ledger is $1,600,000. 
C) The net realizable value of Gloria's accounts receivable is $1,600,000. 
D) Gloria expects to collect only $1,500,000 from its customers. 
A) Gloria expects that $1,700,000 of accounts receivable will be collected after year end. 
B) The balance in the Accounts Receivable account in Gloria's general ledger is $1,600,000. 
C) The net realizable value of Gloria's accounts receivable is $1,600,000. 
D) Gloria expects to collect only $1,500,000 from its customers.

Question 11

The payee of a note recognizes a note payable on the balance sheet and interest expense on its income statement.

Accepted Answer

A) True 
 B)False

Question 12

Because the allowance method results in better matching, accounting standards require its use rather than the direct write-off method, unless bad debts are immaterial.

Accepted Answer

A) True 
 B)False

Question 13

The use of the allowance method is an attempt by accountants to match bad debts as an expense with the revenue of the period in which a sale on credit takes place.

Accepted Answer

A) True 
 B)False

Question 14

Wagner's Bookstore acquires a 6% $12,000 certificate of deposit on September 1.The term of the CD is six months.At that time, all principal and accrued interest will be paid in cash.Indicate the effect on the financial statements at December 31.

Accepted Answer

A) Interest Receivable increases $240, Interest Revenue increases $240 
B) Interest Receivable increases $360, Interest Revenue increases $360 
C) Interest Receivable increases $480, Interest Revenue increases $480 
D) Interest Receivable increases $720, Interest Revenue increases $720 
A) Interest Receivable increases $240, Interest Revenue increases $240 
B) Interest Receivable increases $360, Interest Revenue increases $360 
C) Interest Receivable increases $480, Interest Revenue increases $480 
D) Interest Receivable increases $720, Interest Revenue increases $720

Question 15

Accounts receivable are shown on the balance sheet at their net realizable amount.

Accepted Answer

A) True 
 B)False

Question 16

Securities issued by corporations as a form of ownership in the business, such as common or preferred stock, are called _________________________.

Accepted Answer

The answer of Securities issued by corporations as a form...

Question 17

A decrease in accounts receivable represents an increase in a company's cash flow from operating activities.

Accepted Answer

A) True 
 B)False

Question 18

Which one of the following is not an accurate description of Allowance for Doubtful Accounts?

Accepted Answer

A) Contra account 
B) Balance sheet account 
C) Income statement account 
D) Current asset account 
A) Contra account 
B) Balance sheet account 
C) Income statement account 
D) Current asset account

Question 19

If a company uses the allowance method to account for bad debts, when will the company's owners' equity decrease?

Accepted Answer

A) At the date a customer's account is written off 
B) At the end of the accounting period when an adjusting entry for bad debts is recorded 
C) At the date a customer's account is determined to be uncollectible 
D) When the accounts receivable amount becomes past due 
A) At the date a customer's account is written off 
B) At the end of the accounting period when an adjusting entry for bad debts is recorded 
C) At the date a customer's account is determined to be uncollectible 
D) When the accounts receivable amount becomes past due

Question 20

The payee of a note recognizes a note receivable on the balance sheet and interest revenue on its income statement.

Accepted Answer

A) True 
 B)False

Whether investments are reported as current assets or noncurrent assets depends on the company's intent.

Where can the amounts needed to compute the accounts receivable turnover ratio be found?

The reason the allowance method of recognizing bad debts is used is primarily because it recognizes the maximum amount of write-off in each period.

Music Corporation The data below is for Music Corporation for 2015. -Refer to the data for Music Corporation. If the aging approach is used to estimate bad debts, what is the balance in the Allowance for Doubtful Accounts after the bad debt expense adjustment?

On July 1, 2014, Falcon Company received a $20,000 promissory note for services from Jordyn Company.The annual interest rate is 5%.Principal and interest are paid in cash at the maturity date of June 30, 2013. The effect on Falcon's financial statements on July 1, 2014 is as follows

The party that receives the payment due from a note is called the .

The maker of a note recognizes a note payable on the balance sheet and interest expense on its income statement.

The following information was presented in the balance sheet of Gloria Company as of December 31, 2014: Which one of the following statements is true?

The payee of a note recognizes a note payable on the balance sheet and interest expense on its income statement.

Because the allowance method results in better matching, accounting standards require its use rather than the direct write-off method, unless bad debts are immaterial.

The use of the allowance method is an attempt by accountants to match bad debts as an expense with the revenue of the period in which a sale on credit takes place.

Wagner's Bookstore acquires a 6% $12,000 certificate of deposit on September 1.The term of the CD is six months.At that time, all principal and accrued interest will be paid in cash.Indicate the effect on the financial statements at December 31.

Accounts receivable are shown on the balance sheet at their net realizable amount.

Securities issued by corporations as a form of ownership in the business, such as common or preferred stock, are called _________________________.

A decrease in accounts receivable represents an increase in a company's cash flow from operating activities.

Which one of the following is not an accurate description of Allowance for Doubtful Accounts?

If a company uses the allowance method to account for bad debts, when will the company's owners' equity decrease?

The payee of a note recognizes a note receivable on the balance sheet and interest revenue on its income statement.

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

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Exam 7: Receivables and Investments

Whether investments are reported as current assets or noncurrent assets depends on the company's intent.

Where can the amounts needed to compute the accounts receivable turnover ratio be found?

The reason the allowance method of recognizing bad debts is used is primarily because it recognizes the maximum amount of write-off in each period.

Music Corporation The data below is for Music Corporation for 2015. -Refer to the data for Music Corporation. If the aging approach is used to estimate bad debts, what is the balance in the Allowance for Doubtful Accounts after the bad debt expense adjustment?

On July 1, 2014, Falcon Company received a $20,000 promissory note for services from Jordyn Company.The annual interest rate is 5%.Principal and interest are paid in cash at the maturity date of June 30, 2013. The effect on Falcon's financial statements on July 1, 2014 is as follows

The party that receives the payment due from a note is called the .

The maker of a note recognizes a note payable on the balance sheet and interest expense on its income statement.

The following information was presented in the balance sheet of Gloria Company as of December 31, 2014: Which one of the following statements is true?

The payee of a note recognizes a note payable on the balance sheet and interest expense on its income statement.

Because the allowance method results in better matching, accounting standards require its use rather than the direct write-off method, unless bad debts are immaterial.

The use of the allowance method is an attempt by accountants to match bad debts as an expense with the revenue of the period in which a sale on credit takes place.

Wagner's Bookstore acquires a 6% $12,000 certificate of deposit on September 1.The term of the CD is six months.At that time, all principal and accrued interest will be paid in cash.Indicate the effect on the financial statements at December 31.

Accounts receivable are shown on the balance sheet at their net realizable amount.

Securities issued by corporations as a form of ownership in the business, such as common or preferred stock, are called _________________________.

A decrease in accounts receivable represents an increase in a company's cash flow from operating activities.

Which one of the following is not an accurate description of Allowance for Doubtful Accounts?

If a company uses the allowance method to account for bad debts, when will the company's owners' equity decrease?

The payee of a note recognizes a note receivable on the balance sheet and interest revenue on its income statement.

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters