Question 1

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 2

When Company X buys stock in Company Y, Company X is referred to as the investee.

Accepted Answer

A) True 
 B)False

Question 3

Select the term from the list below that matches each of the following six descriptions.
-The length of time a note is outstanding -- the period of time between the date it is issued and the date it matures

Accepted Answer

A) Interest 
B) Maturity value 
C) Principal 
D) Payee 
E) Discounting
F)Term
G)Recourse
H)Implicit
I)Maker 
A) Interest 
B) Maturity value 
C) Principal 
D) Payee 
E) Discounting
F)Term
G)Recourse
H)Implicit
I)Maker

Question 4

On January 15, 2015, the accounts receivable balance was $7,000 and the balance in the allowance for doubtful accounts was $700. On January 16, 2015, a $200 uncollectible account was written-off. The net realizable value of accounts receivable on January 16 immediately after the write-off is:

Accepted Answer

A)  $6,300 
B)  $6,800 
C)  $6,500 
D)  $7,900 
A)  $6,300 
B)  $6,800 
C)  $6,500 
D)  $7,900

Question 5

Refer to the data for Slammer Sports.
Assume that the net realizable value is $170,000 after the adjustment for bad debts in 2014. How much is the net realizable value of accounts receivable after a customer's account of $2,500 is written off? Explain why.

Accepted Answer

$170,000
Accounts receivable a

Question 6

The accounts receivable turnover ratio is computed by dividing by average accounts receivable.

Accepted Answer

The answer of The accounts receivable turnover ratio is computed...

Question 7

Match the following definitions with their appropriate terms in the next 14 questions.
-Debt securities

Accepted Answer

A) A liability resulting from the signing of a promissory note. 
B) A measure of how long it takes to collect receivables. 
C) A written promise to repay a definite sum of money on demand or at a fixed or determinable date in the future. 
D) The length of time a note is outstanding, that is, the period of time between the date it is issued and the date it matures. 
E) The party that will receive the money from a promissory note at some future date.
F)The process of selling a promissory note.
G)The date the promissory note is due.
H)The amount of cash the maker is to pay the payee on the maturity date of the note.
I)The difference between the principal amount of the note and its maturity value.
J)An asset resulting from the acceptance of a promissory note from another company.
K)Securities issued by corporations and governmental bodies as a form of borrowing.
L)Securities issued by corporations as a form of ownership in the business.
M)The party that agrees to repay the money for a promissory note at some future date.
N)The amount of cash received, or the fair value of the products or services received, by the maker when a promissory note is issued. 
A) A liability resulting from the signing of a promissory note. 
B) A measure of how long it takes to collect receivables. 
C) A written promise to repay a definite sum of money on demand or at a fixed or determinable date in the future. 
D) The length of time a note is outstanding, that is, the period of time between the date it is issued and the date it matures. 
E) The party that will receive the money from a promissory note at some future date.
F)The process of selling a promissory note.
G)The date the promissory note is due.
H)The amount of cash the maker is to pay the payee on the maturity date of the note.
I)The difference between the principal amount of the note and its maturity value.
J)An asset resulting from the acceptance of a promissory note from another company.
K)Securities issued by corporations and governmental bodies as a form of borrowing.
L)Securities issued by corporations as a form of ownership in the business.
M)The party that agrees to repay the money for a promissory note at some future date.
N)The amount of cash received, or the fair value of the products or services received, by the maker when a promissory note is issued.

Question 8

Which one of the following is not an accurate statement regarding the direct write-off method of accounting for bad debts?

Accepted Answer

A)  The direct write-off method has some deficiencies when accounting for bad debts. 
B)  The direct write-off method ignores the possibility that partial collection of a company's outstanding accounts receivable may occur. 
C)  Under the direct write-off method, an expense is increased. 
D)  The allowance method for bad debts violates the matching principle, but the direct write-off method does not. 
A)  The direct write-off method has some deficiencies when accounting for bad debts. 
B)  The direct write-off method ignores the possibility that partial collection of a company's outstanding accounts receivable may occur. 
C)  Under the direct write-off method, an expense is increased. 
D)  The allowance method for bad debts violates the matching principle, but the direct write-off method does not.

Question 9

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 10

Purchases and sales of cash equivalents are reported as investing activities on a statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 11

Meta Inc. pays $18,000 to buy stock in another company and an additional $350 in commissions. Three months later, Meta sells the stock for $19,000. At the time of sale, Meta will recognize a:

Accepted Answer

A)  A $650 loss 
B)  A $1,000 gain 
C)  A $350 loss 
D)  A $650 gain 
A)  A $650 loss 
B)  A $1,000 gain 
C)  A $350 loss 
D)  A $650 gain

Question 12

A general ledger account that is supported by a subsidiary ledger is called an .

Accepted Answer

The answer of A general ledger account that is supported...

Question 13

Cyprus Corp. received a 7%, 6-month promissory note with a face amount of $8,000 from the Mustafa Company for the sale of merchandise on May 1, 2014. Cyprus' accounting year­end is December 31.
REQUIRED: How much interest income will Cyprus Corp. recognize over the term of the note?

Accepted Answer

$280
$8,000 Principa

Question 14

Pharma Corp.
The data presented below for Pharma Corp. is for the year ended December 31, 2015:
  
-See the data for Pharma Corp. If Pharma Corp. estimates its bad debts at 1% of net credit sales, what amount will be reported as bad debt expense for 2015?

Accepted Answer

A)  $12,400 
B)  $13,700 
C)  $14,000 
D)  $14,300 
A)  $12,400 
B)  $13,700 
C)  $14,000 
D)  $14,300

Question 15

What is the impact on the cash flow statement from an increase in short-term notes receivable, assuming the indirect method is used?

Accepted Answer

A)  A decrease in the cash flow from operating activities 
B)  An increase in the cash flow from operating activities 
C)  An increase in the cash flow from financing activities 
D)  An increase in the cash flow from investing activities 
A)  A decrease in the cash flow from operating activities 
B)  An increase in the cash flow from operating activities 
C)  An increase in the cash flow from financing activities 
D)  An increase in the cash flow from investing activities

Question 16

Verilux Company sold merchandise to Flight Corp. on November 1, 2014, for $10,000. Verilux accepted a promissory note from Flight Corp. for $10,000. The note has a term of 5 months and a stated interest rate of 7%. Verilux's accounting period ends on December 31, 2014. What amount should Verilux recognize as interest revenue on December 31, 2014?

Accepted Answer

A)  $-0- 
B)  $116.67 
C)  $291.67 
D)  $280.00 
A)  $-0- 
B)  $116.67 
C)  $291.67 
D)  $280.00

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 an accurate description of Allowance for Doubtful Accounts?

Accepted Answer

A)  Contra account 
B)  Liability account 
C)  Revenue account 
D)  Expense account 
A)  Contra account 
B)  Liability account 
C)  Revenue account 
D)  Expense account

Question 19

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 20

When one company purchases less than 50% of equity securities in a second company, which of the following statements is true?

Accepted Answer

A)  The purchaser is referred to as the parent. 
B)  The purchaser is referred to as the subsidiary. 
C)  The company whose securities are purchased is the subsidiary. 
D)  The company whose securities are purchased is the investee. 
A)  The purchaser is referred to as the parent. 
B)  The purchaser is referred to as the subsidiary. 
C)  The company whose securities are purchased is the subsidiary. 
D)  The company whose securities are purchased is the investee.

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

When Company X buys stock in Company Y, Company X is referred to as the investee.

Select the term from the list below that matches each of the following six descriptions. -The length of time a note is outstanding -- the period of time between the date it is issued and the date it matures

On January 15, 2015, the accounts receivable balance was $7,000 and the balance in the allowance for doubtful accounts was $700. On January 16, 2015, a $200 uncollectible account was written-off. The net realizable value of accounts receivable on January 16 immediately after the write-off is:

Refer to the data for Slammer Sports. Assume that the net realizable value is $170,000 after the adjustment for bad debts in 2014. How much is the net realizable value of accounts receivable after a customer's account of $2,500 is written off? Explain why.

The accounts receivable turnover ratio is computed by dividing by average accounts receivable.

Match the following definitions with their appropriate terms in the next 14 questions. -Debt securities

Which one of the following is not an accurate statement regarding the direct write-off method of accounting for bad debts?

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

Purchases and sales of cash equivalents are reported as investing activities on a statement of cash flows.

Meta Inc. pays $18,000 to buy stock in another company and an additional $350 in commissions. Three months later, Meta sells the stock for $19,000. At the time of sale, Meta will recognize a:

A general ledger account that is supported by a subsidiary ledger is called an .

Cyprus Corp. received a 7%, 6-month promissory note with a face amount of $8,000 from the Mustafa Company for the sale of merchandise on May 1, 2014. Cyprus' accounting yearend is December 31. REQUIRED: How much interest income will Cyprus Corp. recognize over the term of the note?

Pharma Corp. The data presented below for Pharma Corp. is for the year ended December 31, 2015: -See the data for Pharma Corp. If Pharma Corp. estimates its bad debts at 1% of net credit sales, what amount will be reported as bad debt expense for 2015?

What is the impact on the cash flow statement from an increase in short-term notes receivable, assuming the indirect method is used?

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

Which one of the following is an accurate description of Allowance for Doubtful Accounts?

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.

When one company purchases less than 50% of equity securities in a second company, which of the following statements is true?

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

Exam 7: Receivables and Investments

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

When Company X buys stock in Company Y, Company X is referred to as the investee.

Select the term from the list below that matches each of the following six descriptions. -The length of time a note is outstanding -- the period of time between the date it is issued and the date it matures

On January 15, 2015, the accounts receivable balance was $7,000 and the balance in the allowance for doubtful accounts was $700. On January 16, 2015, a $200 uncollectible account was written-off. The net realizable value of accounts receivable on January 16 immediately after the write-off is:

Refer to the data for Slammer Sports. Assume that the net realizable value is $170,000 after the adjustment for bad debts in 2014. How much is the net realizable value of accounts receivable after a customer's account of $2,500 is written off? Explain why.

The accounts receivable turnover ratio is computed by dividing by average accounts receivable.

Match the following definitions with their appropriate terms in the next 14 questions. -Debt securities

Which one of the following is not an accurate statement regarding the direct write-off method of accounting for bad debts?

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

Purchases and sales of cash equivalents are reported as investing activities on a statement of cash flows.

Meta Inc. pays $18,000 to buy stock in another company and an additional $350 in commissions. Three months later, Meta sells the stock for $19,000. At the time of sale, Meta will recognize a:

A general ledger account that is supported by a subsidiary ledger is called an .

Cyprus Corp. received a 7%, 6-month promissory note with a face amount of $8,000 from the Mustafa Company for the sale of merchandise on May 1, 2014. Cyprus' accounting year­end is December 31. REQUIRED: How much interest income will Cyprus Corp. recognize over the term of the note?

Pharma Corp. The data presented below for Pharma Corp. is for the year ended December 31, 2015: -See the data for Pharma Corp. If Pharma Corp. estimates its bad debts at 1% of net credit sales, what amount will be reported as bad debt expense for 2015?

What is the impact on the cash flow statement from an increase in short-term notes receivable, assuming the indirect method is used?

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

Which one of the following is an accurate description of Allowance for Doubtful Accounts?

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.

When one company purchases less than 50% of equity securities in a second company, which of the following statements is true?

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

Cyprus Corp. received a 7%, 6-month promissory note with a face amount of $8,000 from the Mustafa Company for the sale of merchandise on May 1, 2014. Cyprus' accounting yearend is December 31. REQUIRED: How much interest income will Cyprus Corp. recognize over the term of the note?