Exam 7: Receivables and Investments

Identify two methods of accelerating cash from sales.

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?

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.

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?

A company that holds a promissory note from another company has an asset, called an ____________________.

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 payable on the balance sheet and interest expense on its income statement.

When using the allowance method, what are the effects on the accounting equation when a company writes off a bad debt?

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

The entry required to recognize the bad debts expense will act to:

The accounts receivable turnover ratio is used to evaluate how well a company does in collecting its accounts receivable.

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

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

Select the term from the list below that matches each of the following six descriptions. -Transfer a note with a contingent liability

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

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.

The party to a promissory note that agrees to repay money on the maturity date of the note is called the

When a note is discounted at a bank, it is normally done with recourse.

Select the term from the list below that matches each of the following six descriptions. -The party that receives payment due from a note

A high accounts receivable turnover ratio could mean that the company's credit policies may be too stringent.