Question 1

The fee for factoring with recourse is normally higher than it would be without recourse.

Accepted Answer

A) True 
 B)False  False

Question 2

Jayne Luke started a computer business in her basement less than a year ago.Her personal attention to clients and persistence in obtaining new customers has caused the business to grow at a tremendous pace.Jayne has become so busy she has neglected to keep after clients who have failed to pay her.As a result,Jayne has a large amount of accounts receivable and notes receivable on her balance sheet but not much cash.She continues to service clients,but she now realizes that her cash will soon be exhausted.Suggest some options Jayne has to achieve a strong cash balance.

Accepted Answer

Some options Jayne Luke could explore to increase her cash balance are to (1)hire someone to work as an account collector for her, (2)use her large amount of receivables as collateral for a loan, (3)sell her accounts receivable to a factor,and (4)discount the notes receivable at a bank.

Question 3

The general ledger account for Accounts Receivable shows a debit balance of $50,000.Allowance for Uncollectible Accounts has a credit balance of $3,000.Net sales for the year were $500,000.In the past,3 percent of sales have proved uncollectible,and an aging of accounts receivable resulted in an estimate of $20,000 of uncollectible accounts receivable.
Using the percentage of net sales method,the Allowance for Uncollectible Accounts balance (after adjustment)would be
a.$15,000.
b.$20,000.
c.$18,000.
d.$12,000.

Accepted Answer

C

Question 4

A check that is outstanding for two consecutive months will appear only on the first month's bank reconciliation.

Accepted Answer

A) True 
 B)False

Question 5

If the amount of uncollectible accounts expense is understated at year end,

Accepted Answer

A)  net Accounts Receivable will be overstated. 
B)  total liabilities will be overstated. 
C)  net income will be understated. 
D)  Allowance for Uncollectible Accounts will be overstated. 
A)  net Accounts Receivable will be overstated. 
B)  total liabilities will be overstated. 
C)  net income will be understated. 
D)  Allowance for Uncollectible Accounts will be overstated.

Question 6

On a bank reconciliation,interest income would be added to the balance per book.

Accepted Answer

A) True 
 B)False

Question 7

The debtor named in a promissory note is called the maker.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements is not true when FLK Company discounts a note receivable to the bank?

Accepted Answer

A)  FLK may ultimately have to pay the bank when the note is due. 
B)  If the maker of the note pays the bank on time,no liability will result to FLK. 
C)  FLK will receive the maturity value from the bank. 
D)  A contingent liability arises for FLK. 
A)  FLK may ultimately have to pay the bank when the note is due. 
B)  If the maker of the note pays the bank on time,no liability will result to FLK. 
C)  FLK will receive the maturity value from the bank. 
D)  A contingent liability arises for FLK.

Question 9

Carlson Corporation engaged in the following transactions involving promissory notes in 2012 and 2013.Journalize these transactions in the journal provided.(Omit explanations.)Round to nearest whole dollar.

Accepted Answer

The answer of Carlson Corporation engaged in the following transactions...

Question 10

The general ledger account for Accounts Receivable shows a debit balance of $50,000.Allowance for Uncollectible Accounts has a credit balance of $3,000.Net sales for the year were $500,000.In the past,3 percent of sales have proved uncollectible,and an aging of accounts receivable resulted in an estimate of $20,000 of uncollectible accounts receivable. Using the accounts receivable aging method,the Allowance for Uncollectible Accounts balance (after adjustment)would be

Accepted Answer

A)  $23,000. 
B)  $20,000. 
C)  $17,000. 
D)  $21,500. 
A)  $23,000. 
B)  $20,000. 
C)  $17,000. 
D)  $21,500.

Question 11

At year end,Blue Earth Company has a $3,600 credit balance in Allowance for Uncollectible Accounts.If an accounts receiving aging method analysis indicates that an estimated $22,800 of year-end receivables are uncollectible,what will be the balance in Allowance for Uncollectible Accounts after the appropriate adjusting entry for uncollectible accounts has been made? Indicate if the balance is a debit or credit.

Accepted Answer

The answer of At year end,Blue Earth Company has a...

Question 12

A contingent liability is generally not disclosed in the notes to the financial statements.

Accepted Answer

A) True 
 B)False

Question 13

On a bank reconciliation,outstanding checks are deducted from the balance per books.

Accepted Answer

A) True 
 B)False

Question 14

A company has net sales of $100,000 during the year.At year end (before an adjustment is made),Allowance for Uncollectible Accounts has a credit balance of $5,000.If the company estimates that 3 percent of net sales are uncollectible and the company uses percentage of net sales method,what is the balance in the allowance account after the year-end adjustment has been made?
a.$3,000 debit balance
b.$3,000 credit balance
c.$8,000 credit balance
d.$2,000 debit balance

Accepted Answer

The answer of A company has net sales of $100,000...

Question 15

When a bank reconciliation balances,no errors could have been made by the bank or the company.

Accepted Answer

A) True 
 B)False

Question 16

The account Allowance for Uncollectible Accounts is classified as a(n)

Accepted Answer

A)  contra account to Bad Debt Expense. 
B)  expense. 
C)  asset. 
D)  contra account to Accounts Receivable. 
A)  contra account to Bad Debt Expense. 
B)  expense. 
C)  asset. 
D)  contra account to Accounts Receivable.

Question 17

Receivable turnover cannot be calculated without first knowing the days' sales uncollected.

Accepted Answer

A) True 
 B)False

Question 18

Assume that part of accounts and other receivables on Kittson Company's February 2,2010,balance sheet is comprised of $4,322,500 of notes receivable.Two notes make up the amount.The first note has a face value of $3,000,000 and bears interest at 7 percent for 90 days.The second note has a face value of $1,322,500 and bears interest at 9 percent for 120 days.Record the journal entry for the collection of the 7 percent note on May 3 and the dishonor of the 9 percent note on June 2.(Omit explanations; assume no interest had been accrued.)Round amounts to nearest dollar.

Accepted Answer

The answer of Assume that part of accounts and other...

Question 19

Match each definition with the correct term below.
-Imprest system

Accepted Answer

A) One way to control a cash fund and cash advances. 
B) A minimum amount that a bank requires a company to keep in its bank account as part of a credit-granting arrangement. 
C) The method of estimating uncollectible accounts that calculates the Uncollectible Accounts Expense. 
D) The process of accounting for the difference between the balance on a company's bank statement and the balance in its Cash account. 
E) The total proceeds of a promissory note.
F)An unconditional promise to pay a definite sum of money on demand or at a future date.
G)The method of accounting for uncollectible accounts that matches bad debts against the sales they help produce.
H)Short-term financial assets that arise from credit sales made in the ordinary course of doing business.
I)A method of conducting business transactions that does not involve the actual transfer of cash.
J)The cost of borrowing money or the return on lending money.
K)A potential liability that can develop into a real liability if a particular event occurs.
L)The method of estimating uncollectible accounts that calculates the targeted balance of Allowance for Uncollectible Accounts. 
A) One way to control a cash fund and cash advances. 
B) A minimum amount that a bank requires a company to keep in its bank account as part of a credit-granting arrangement. 
C) The method of estimating uncollectible accounts that calculates the Uncollectible Accounts Expense. 
D) The process of accounting for the difference between the balance on a company's bank statement and the balance in its Cash account. 
E) The total proceeds of a promissory note.
F)An unconditional promise to pay a definite sum of money on demand or at a future date.
G)The method of accounting for uncollectible accounts that matches bad debts against the sales they help produce.
H)Short-term financial assets that arise from credit sales made in the ordinary course of doing business.
I)A method of conducting business transactions that does not involve the actual transfer of cash.
J)The cost of borrowing money or the return on lending money.
K)A potential liability that can develop into a real liability if a particular event occurs.
L)The method of estimating uncollectible accounts that calculates the targeted balance of Allowance for Uncollectible Accounts.

Question 20

All of the following bank reconciliation items would result in a journal entry on the company's books except

Accepted Answer

A)  error in recording deposit. 
B)  fee for collection of note by bank. 
C)  NSF check of customer. 
D)  outstanding checks. 
A)  error in recording deposit. 
B)  fee for collection of note by bank. 
C)  NSF check of customer. 
D)  outstanding checks.

The fee for factoring with recourse is normally higher than it would be without recourse.

A check that is outstanding for two consecutive months will appear only on the first month's bank reconciliation.

If the amount of uncollectible accounts expense is understated at year end,

On a bank reconciliation,interest income would be added to the balance per book.

The debtor named in a promissory note is called the maker.

Which of the following statements is not true when FLK Company discounts a note receivable to the bank?

Carlson Corporation engaged in the following transactions involving promissory notes in 2012 and 2013.Journalize these transactions in the journal provided.(Omit explanations.)Round to nearest whole dollar.

A contingent liability is generally not disclosed in the notes to the financial statements.

On a bank reconciliation,outstanding checks are deducted from the balance per books.

When a bank reconciliation balances,no errors could have been made by the bank or the company.

The account Allowance for Uncollectible Accounts is classified as a(n)

Receivable turnover cannot be calculated without first knowing the days' sales uncollected.

Match each definition with the correct term below. -Imprest system

All of the following bank reconciliation items would result in a journal entry on the company's books except

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Inventories

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Investments

Filters

Exam 8: Cash and Receivables

The fee for factoring with recourse is normally higher than it would be without recourse.

A check that is outstanding for two consecutive months will appear only on the first month's bank reconciliation.

If the amount of uncollectible accounts expense is understated at year end,

On a bank reconciliation,interest income would be added to the balance per book.

The debtor named in a promissory note is called the maker.

Which of the following statements is not true when FLK Company discounts a note receivable to the bank?

Carlson Corporation engaged in the following transactions involving promissory notes in 2012 and 2013.Journalize these transactions in the journal provided.(Omit explanations.)Round to nearest whole dollar.

A contingent liability is generally not disclosed in the notes to the financial statements.

On a bank reconciliation,outstanding checks are deducted from the balance per books.

When a bank reconciliation balances,no errors could have been made by the bank or the company.

The account Allowance for Uncollectible Accounts is classified as a(n)

Receivable turnover cannot be calculated without first knowing the days' sales uncollected.

Match each definition with the correct term below. -Imprest system

All of the following bank reconciliation items would result in a journal entry on the company's books except

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Inventories

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Investments

Filters