Question 1

If a company discounts a note at a bank, but still is contingently liable for the maturity value, then the note was discounted with ____________________.

Accepted Answer

The answer of If a company discounts a note at...

Question 2

Genuine Parts received a promissory note from a customer on March 1, 2015.The face amount of the note is $8,000; the terms are 90 days and 9% interest.What is the total amount of interest that Genuine Parts will receive when the note is paid?

Accepted Answer

A) $ 60 
B) $ 90 
C) $180 
D) $720 
A) $ 60 
B) $ 90 
C) $180 
D) $720

Question 3

When a company discounts a promissory note at the bank, it receives cash at the same time it would if it held the note to maturity.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Both stock and bond investments have maturity dates.

Accepted Answer

A) True 
 B)False

Question 6

Why do businesses invest in short-term investments?

Accepted Answer

A) They are trying to gain control over the activities of other companies. 
B) They are investing excess cash to meet future business operation or investment needs. 
C) They are lending money to companies that cannot obtain bank loans. 
D) More than one of the above is correct. 
A) They are trying to gain control over the activities of other companies. 
B) They are investing excess cash to meet future business operation or investment needs. 
C) They are lending money to companies that cannot obtain bank loans. 
D) More than one of the above is correct.

Question 7

On July 1, 2015, Frank Corp.purchased $100,000 of 8% bonds at face value.Interest is paid annually on June 30.If the accounting year for Frank ends at December 31, 2015, what will be reported with respect to the bonds on that date?

Accepted Answer

A) The carrying value of the bonds will be $108,000. 
B) The cash received in interest will be $8,000. 
C) Interest income in the amount of $4,000 will be accrued. 
D) A loss on the bonds will be reported in the Other Income and Expense section of the 2015 income statement until the entire amount of interest is paid on June 30, 2016. 
A) The carrying value of the bonds will be $108,000. 
B) The cash received in interest will be $8,000. 
C) Interest income in the amount of $4,000 will be accrued. 
D) A loss on the bonds will be reported in the Other Income and Expense section of the 2015 income statement until the entire amount of interest is paid on June 30, 2016.

Question 8

The party that agrees to repay is the of the note.

Accepted Answer

The answer of The party that agrees to repay is...

Question 9

The equity method of accounting is used if the investor owns at least 20% of the investee and the investor is able to secure influence over the investee.

Accepted Answer

A) True 
 B)False

Question 10

What are the effects on the accounting equation from the purchase of a short-term investment?

Accepted Answer

A) Assets and stockholders' equity decrease. 
B) No effects-assets increase and decrease by the same amount. 
C) Assets and liabilities decrease. 
D) Stockholders' equity decreases and liabilities increase. 
A) Assets and stockholders' equity decrease. 
B) No effects-assets increase and decrease by the same amount. 
C) Assets and liabilities decrease. 
D) Stockholders' equity decreases and liabilities increase.

Question 11

If a company accepts a major credit card such as VISA from a customer, then the company is responsible for the amount of the sale in a case of nonpayment from a cardholder.

Accepted Answer

A) True 
 B)False

Question 12

Significant influence of one company over another has been defined by the accounting profession as the ownership of what minimum percent of the second company's stock?

Accepted Answer

A) 30% 
B) 50% 
C) 100% 
D) 20% 
A) 30% 
B) 50% 
C) 100% 
D) 20%

Question 13

Router Inc.lends $70,000 on a 120-day, 9% promissory note.The total interest that Router will receive at maturity is

Accepted Answer

A) $6,300 
B) $2,100 
C) $525 
D) $1,890 
A) $6,300 
B) $2,100 
C) $525 
D) $1,890

Question 14

Mellon Corporation
The data presented below is for Mellon Corporation for the year ended December 31, 2015:  
-Refer to the data for Mellon Corporation.
If Mellon uses the aging of accounts receivable approach to estimate its bad debts, what amount will be reported as bad debt expense for 2015?

Accepted Answer

A) $28,000 
B) $31,000 
C) $34,000 
D) $50,000 
A) $28,000 
B) $31,000 
C) $34,000 
D) $50,000

Question 15

Which one of the following is an investing activity on the statement of cash flows?

Accepted Answer

A) Collection of accounts receivable 
B) Purchase of long-term investments 
C) Receipt of interest 
D) Receipt of dividends 
A) Collection of accounts receivable 
B) Purchase of long-term investments 
C) Receipt of interest 
D) Receipt of dividends

Question 16

Which one of the approaches for the allowance method of accounting for bad debts emphasizes the net realizable value of accounts receivable on the balance sheet?

Accepted Answer

A) The percentage of accounts receivable approach 
B) The percentage of net credit sales approach 
C) The direct write-off method 
D) The uncollectible approach 
A) The percentage of accounts receivable approach 
B) The percentage of net credit sales approach 
C) The direct write-off method 
D) The uncollectible approach

Question 17

Genuine Parts received a promissory note from a customer on March 1, 2015.The face amount of the note is $8,000; the terms are 90 days and 9% interest.At the maturity date, the customer pays the amount due for the note and interest.What entry is required on the books of Genuine Parts on the maturity date assuming none of the interest had already been recognized?

Accepted Answer

A) Increase Cash, $8,000, and decrease Notes Receivable $8,000 
B) Increase Cash, $8,180, increase Interest Revenue, $180, and decrease Notes Receivable, $8,000 
C) Increase Cash $8,720, decrease Notes Receivable $8,000, and increase Interest Revenue, $720 
D) No entry is required; the customer pays the amount due to the bank 
A) Increase Cash, $8,000, and decrease Notes Receivable $8,000 
B) Increase Cash, $8,180, increase Interest Revenue, $180, and decrease Notes Receivable, $8,000 
C) Increase Cash $8,720, decrease Notes Receivable $8,000, and increase Interest Revenue, $720 
D) No entry is required; the customer pays the amount due to the bank

Question 18

What is the distinguishing characteristic between accounts receivable and notes receivable?

Accepted Answer

A) Accounts receivable are usually current assets while notes receivable are usually long-term assets. 
B) Accounts receivable require payment of interest if not paid within the usual credit terms. 
C) Notes receivable result from credit sale transactions for merchandising companies, while accounts receivable result from credit sale transactions for service companies. 
D) Notes receivable result from a written promise to pay within a specified amount of time. 
A) Accounts receivable are usually current assets while notes receivable are usually long-term assets. 
B) Accounts receivable require payment of interest if not paid within the usual credit terms. 
C) Notes receivable result from credit sale transactions for merchandising companies, while accounts receivable result from credit sale transactions for service companies. 
D) Notes receivable result from a written promise to pay within a specified amount of time.

Question 19

If Ash Company had sales during the year of $10,000,000, an average accounts receivable of $2,000,000, and net income of $500,000, its accounts receivable turnover ratio would be 0.25.

Accepted Answer

A) True 
 B)False

Question 20

-Refer to the data for Benton Corporation.
What is the balance of Accounts Receivable at December 31, 2015?

Accepted Answer

A) $209,000 
B) $225,000 
C) $447,000 
D) $459,000 
A) $209,000 
B) $225,000 
C) $447,000 
D) $459,000

If a company discounts a note at a bank, but still is contingently liable for the maturity value, then the note was discounted with ____________________.

Genuine Parts received a promissory note from a customer on March 1, 2015.The face amount of the note is $8,000; the terms are 90 days and 9% interest.What is the total amount of interest that Genuine Parts will receive when the note is paid?

When a company discounts a promissory note at the bank, it receives cash at the same time it would if it held the note to maturity.

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

Both stock and bond investments have maturity dates.

Why do businesses invest in short-term investments?

On July 1, 2015, Frank Corp.purchased $100,000 of 8% bonds at face value.Interest is paid annually on June 30.If the accounting year for Frank ends at December 31, 2015, what will be reported with respect to the bonds on that date?

The party that agrees to repay is the of the note.

The equity method of accounting is used if the investor owns at least 20% of the investee and the investor is able to secure influence over the investee.

What are the effects on the accounting equation from the purchase of a short-term investment?

If a company accepts a major credit card such as VISA from a customer, then the company is responsible for the amount of the sale in a case of nonpayment from a cardholder.

Significant influence of one company over another has been defined by the accounting profession as the ownership of what minimum percent of the second company's stock?

Router Inc.lends $70,000 on a 120-day, 9% promissory note.The total interest that Router will receive at maturity is

Mellon Corporation The data presented below is for Mellon Corporation for the year ended December 31, 2015: -Refer to the data for Mellon Corporation. If Mellon uses the aging of accounts receivable approach to estimate its bad debts, what amount will be reported as bad debt expense for 2015?

Which one of the following is an investing activity on the statement of cash flows?

Which one of the approaches for the allowance method of accounting for bad debts emphasizes the net realizable value of accounts receivable on the balance sheet?

What is the distinguishing characteristic between accounts receivable and notes receivable?

If Ash Company had sales during the year of $10,000,000, an average accounts receivable of $2,000,000, and net income of $500,000, its accounts receivable turnover ratio would be 0.25.

-Refer to the data for Benton Corporation. What is the balance of Accounts Receivable at December 31, 2015?

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

If a company discounts a note at a bank, but still is contingently liable for the maturity value, then the note was discounted with ____________________.

Genuine Parts received a promissory note from a customer on March 1, 2015.The face amount of the note is $8,000; the terms are 90 days and 9% interest.What is the total amount of interest that Genuine Parts will receive when the note is paid?

When a company discounts a promissory note at the bank, it receives cash at the same time it would if it held the note to maturity.

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

Both stock and bond investments have maturity dates.

Why do businesses invest in short-term investments?

On July 1, 2015, Frank Corp.purchased $100,000 of 8% bonds at face value.Interest is paid annually on June 30.If the accounting year for Frank ends at December 31, 2015, what will be reported with respect to the bonds on that date?

The party that agrees to repay is the of the note.

The equity method of accounting is used if the investor owns at least 20% of the investee and the investor is able to secure influence over the investee.

What are the effects on the accounting equation from the purchase of a short-term investment?

If a company accepts a major credit card such as VISA from a customer, then the company is responsible for the amount of the sale in a case of nonpayment from a cardholder.

Significant influence of one company over another has been defined by the accounting profession as the ownership of what minimum percent of the second company's stock?

Router Inc.lends $70,000 on a 120-day, 9% promissory note.The total interest that Router will receive at maturity is

Mellon Corporation The data presented below is for Mellon Corporation for the year ended December 31, 2015: -Refer to the data for Mellon Corporation. If Mellon uses the aging of accounts receivable approach to estimate its bad debts, what amount will be reported as bad debt expense for 2015?

Which one of the following is an investing activity on the statement of cash flows?

Which one of the approaches for the allowance method of accounting for bad debts emphasizes the net realizable value of accounts receivable on the balance sheet?

What is the distinguishing characteristic between accounts receivable and notes receivable?

If Ash Company had sales during the year of $10,000,000, an average accounts receivable of $2,000,000, and net income of $500,000, its accounts receivable turnover ratio would be 0.25.

-Refer to the data for Benton Corporation. What is the balance of Accounts Receivable at December 31, 2015?

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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