Question 1

Which of the following would not be considered cash?

Accepted Answer

A)  Postage stamps 
B)  Currency on hand 
C)  Money orders from customers 
D)  Bank deposits 
A)  Postage stamps 
B)  Currency on hand 
C)  Money orders from customers 
D)  Bank deposits

Question 2

Cash equivalents are defined as investments that carry a term of less than one year.

Accepted Answer

A) True 
 B)False

Question 3

A discounted note represents a contingent liability because a potential liability exists.

Accepted Answer

A) True 
 B)False

Question 4

Excess cash should be kept in a petty cash fund.

Accepted Answer

A) True 
 B)False

Question 5

On December 31,Becker Products has a $600 credit balance in Allowance for Uncollectible Accounts.It estimates that 4 percent of the $120,000 in sales are uncollectible.After the appropriate adjusting entry for uncollectible accounts has been made using percentage of net sales method,what will be the balance in Allowance for Uncollectible Accounts? Indicate if the balance is a debit or credit.(Show your work.)

Accepted Answer

$5,400 cre

Question 6

Each of the following is a characteristic of a promissory note except a(n)

Accepted Answer

A)  maturity date that can be determined on the date the note is signed. 
B)  payee who has an unconditional right to receive a definite amount on a definite date. 
C)  maker who agrees to pay a definite sum subject to certain conditions. 
D)  amount to be paid that can be determined on the date the note is signed. 
A)  maturity date that can be determined on the date the note is signed. 
B)  payee who has an unconditional right to receive a definite amount on a definite date. 
C)  maker who agrees to pay a definite sum subject to certain conditions. 
D)  amount to be paid that can be determined on the date the note is signed.

Question 7

Bad debts are considered an expense of selling on credit.

Accepted Answer

A) True 
 B)False

Question 8

Uncollectible accounts cannot be estimated because it is not possible to know which accounts will not be collected.

Accepted Answer

A) True 
 B)False

Question 9

When Company A discounts,with recourse,a note to Company B,Company A has a contingent liability until the note is paid.

Accepted Answer

A) True 
 B)False

Question 10

The general ledger account for Accounts Receivable shows a debit balance of $40,000.The Allowance for Uncollectible Accounts has a credit balance of $2,000.Net sales for the year were $250,000.In the past,3 percent of net sales have proved uncollectible.An aging of accounts receivable accounts results in an estimate of $9,000 of uncollectible accounts receivable.Calculate (a)Uncollectible Accounts Expense and (b)the ending balance of the Allowance for Uncollectible Accounts using (i)the percentage of net sales method and (ii)the accounts receivable aging method.

Accepted Answer

a. (i)$7,500 ($250,000 * .03)

Question 11

What purpose is served by a factoring arrangement? What does it mean to factor accounts receivable with recourse?

Accepted Answer

Factoring involves the sale or transfer

Question 12

Which of the following would be added to the balance per bank?

Accepted Answer

A)  Outstanding checks 
B)  Interest income 
C)  Collection of a note receivable by the bank 
D)  Deposit in transit 
A)  Outstanding checks 
B)  Interest income 
C)  Collection of a note receivable by the bank 
D)  Deposit in transit

Question 13

The allowance method of handling bad debts violates the matching principle.

Accepted Answer

A) True 
 B)False

Question 14

Using the following transactions for the year,show how the T-account below would appear after all appropriate postings have been made.Assume an opening balance of $1,800.

Accepted Answer

The answer of Using the following transactions for the year,show...

Question 15

In the journal provided,prepare entries for the following (assume a calendar-year accounting period): Omit explanations.

Accepted Answer

The answer of In the journal provided,prepare entries for the...

Question 16

The receivable turnover is expressed in terms of times.

Accepted Answer

A) True 
 B)False

Question 17

The balance of Accounts Receivable,net of the allowance account,is $70,000 before the write-off of a $5,600 account.What is the Accounts Receivable balance,net of the allowance account,after the write-off?

Accepted Answer

A)  $70,000 
B)  $64,400 
C)  $5,600 
D)  $75,600 
A)  $70,000 
B)  $64,400 
C)  $5,600 
D)  $75,600

Question 18

Match each definition with the correct term below.
-Bank reconciliation

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 19

Which of the following accounts is classified as a short-term financial asset?

Accepted Answer

A)  Inventory 
B)  Notes Receivable 
C)  Machinery 
D)  Prepaid Insurance 
A)  Inventory 
B)  Notes Receivable 
C)  Machinery 
D)  Prepaid Insurance

Question 20

Both the allowance method and the direct charge-off method are acceptable for tax purposes.

Accepted Answer

A) True 
 B)False

Which of the following would not be considered cash?

Cash equivalents are defined as investments that carry a term of less than one year.

A discounted note represents a contingent liability because a potential liability exists.

Excess cash should be kept in a petty cash fund.

Each of the following is a characteristic of a promissory note except a(n)

Bad debts are considered an expense of selling on credit.

Uncollectible accounts cannot be estimated because it is not possible to know which accounts will not be collected.

When Company A discounts,with recourse,a note to Company B,Company A has a contingent liability until the note is paid.

What purpose is served by a factoring arrangement? What does it mean to factor accounts receivable with recourse?

Which of the following would be added to the balance per bank?

The allowance method of handling bad debts violates the matching principle.

Using the following transactions for the year,show how the T-account below would appear after all appropriate postings have been made.Assume an opening balance of $1,800.

In the journal provided,prepare entries for the following (assume a calendar-year accounting period): Omit explanations.

The receivable turnover is expressed in terms of times.

The balance of Accounts Receivable,net of the allowance account,is $70,000 before the write-off of a $5,600 account.What is the Accounts Receivable balance,net of the allowance account,after the write-off?

Match each definition with the correct term below. -Bank reconciliation

Which of the following accounts is classified as a short-term financial asset?

Both the allowance method and the direct charge-off method are acceptable for tax purposes.

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

Which of the following would not be considered cash?

Cash equivalents are defined as investments that carry a term of less than one year.

A discounted note represents a contingent liability because a potential liability exists.

Excess cash should be kept in a petty cash fund.

Each of the following is a characteristic of a promissory note except a(n)

Bad debts are considered an expense of selling on credit.

Uncollectible accounts cannot be estimated because it is not possible to know which accounts will not be collected.

When Company A discounts,with recourse,a note to Company B,Company A has a contingent liability until the note is paid.

What purpose is served by a factoring arrangement? What does it mean to factor accounts receivable with recourse?

Which of the following would be added to the balance per bank?

The allowance method of handling bad debts violates the matching principle.

Using the following transactions for the year,show how the T-account below would appear after all appropriate postings have been made.Assume an opening balance of $1,800.

In the journal provided,prepare entries for the following (assume a calendar-year accounting period): Omit explanations.

The receivable turnover is expressed in terms of times.

The balance of Accounts Receivable,net of the allowance account,is $70,000 before the write-off of a $5,600 account.What is the Accounts Receivable balance,net of the allowance account,after the write-off?

Match each definition with the correct term below. -Bank reconciliation

Which of the following accounts is classified as a short-term financial asset?

Both the allowance method and the direct charge-off method are acceptable for tax purposes.

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