Question 1

Match each definition with the correct term below.
-Maturity value

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 2

Notes payable and cash are examples of short-term financial assets.

Accepted Answer

A) True 
 B)False

Question 3

What is a contingent liability,and how does it relate to the discounting of a note receivable at the bank?

Accepted Answer

A contingent liability is a potential li

Question 4

Use this information to answer the following question. The general ledger account for Accounts Receivable shows a debit balance of $100,000.Allowance for Uncollectible Accounts has a credit balance of $2,000.Net sales for the year were $1,000,000.In the past,2 percent of sales have proved uncollectible,and an aging of accounts receivable accounts results in an estimate of $27,000 of uncollectible accounts.
Using the accounts receivable aging method,the Allowance for Uncollectible Accounts balance (after adjustment)would be

Accepted Answer

A)  $29,000. 
B)  $28,000. 
C)  $27,000. 
D)  $25,000. 
A)  $29,000. 
B)  $28,000. 
C)  $27,000. 
D)  $25,000.

Question 5

Which of the following would be deducted from the balance per books on a bank reconciliation?

Accepted Answer

A)  Notes collected by the bank 
B)  Deposits in transit 
C)  Service charges 
D)  Outstanding checks 
A)  Notes collected by the bank 
B)  Deposits in transit 
C)  Service charges 
D)  Outstanding checks

Question 6

It is considered unethical to use the estimate for bad debts to purposely manipulate the amount of net income.

Accepted Answer

A) True 
 B)False

Question 7

Under the allowance method,when a specific account is written off,

Accepted Answer

A)  total assets will be unchanged. 
B)  expenses will increase. 
C)  net income will decrease. 
D)  total assets will decrease. 
A)  total assets will be unchanged. 
B)  expenses will increase. 
C)  net income will decrease. 
D)  total assets will decrease.

Question 8

Which of the following statements is false regarding promissory notes?

Accepted Answer

A)  They are sometimes used to extend past-due accounts. 
B)  They can be resold to banks. 
C)  They must be held by the maker until maturity. 
D)  They are often received upon the sale of machinery and automobiles. 
A)  They are sometimes used to extend past-due accounts. 
B)  They can be resold to banks. 
C)  They must be held by the maker until maturity. 
D)  They are often received upon the sale of machinery and automobiles.

Question 9

When using the allowance method,year-end adjustments for uncollectible accounts expense must be made.

Accepted Answer

A) True 
 B)False

Question 10

Accounts receivable and inventory are considered short-term financial assets.

Accepted Answer

A) True 
 B)False

Question 11

The accounts receivable aging method of estimating uncollectible accounts is in violation of the matching principle.

Accepted Answer

A) True 
 B)False

Question 12

Having a compensating balance decreases a company's liquidity.

Accepted Answer

A) True 
 B)False

Question 13

For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation?

Accepted Answer

A)  A returned $600 check recorded by bank as $500 
B)  Check for $164 recorded as $146 
C)  Deposit of $800 recorded by bank as $600 
D)  Check for $69 recorded as $96 
A)  A returned $600 check recorded by bank as $500 
B)  Check for $164 recorded as $146 
C)  Deposit of $800 recorded by bank as $600 
D)  Check for $69 recorded as $96

Question 14

Under the allowance method,Uncollectible Accounts Expense is recorded

Accepted Answer

A)  for an estimated amount. 
B)  several times during the accounting period. 
C)  when an individual account is written off. 
D)  for a known amount. 
A)  for an estimated amount. 
B)  several times during the accounting period. 
C)  when an individual account is written off. 
D)  for a known amount.

Question 15

Trade credit arises from credit sales.

Accepted Answer

A) True 
 B)False

Question 16

Most operating transactions do not use or generate cash.

Accepted Answer

A) True 
 B)False

Question 17

It is usually a good business practice to maintain as large a balance in the Cash account as possible.

Accepted Answer

A) True 
 B)False

Question 18

Days' sales uncollected equals 365 days divided by

Accepted Answer

A)  cash. 
B)  net accounts receivable. 
C)  net sales. 
D)  the receivable turnover. 
A)  cash. 
B)  net accounts receivable. 
C)  net sales. 
D)  the receivable turnover.

Question 19

A successful credit policy balances an acceptable level of credit losses with the potential for profit from total credit sales.

Accepted Answer

A) True 
 B)False

Question 20

The maker of a note records Notes Receivable.

Accepted Answer

A) True 
 B)False

Match each definition with the correct term below. -Maturity value

Notes payable and cash are examples of short-term financial assets.

What is a contingent liability,and how does it relate to the discounting of a note receivable at the bank?

Which of the following would be deducted from the balance per books on a bank reconciliation?

It is considered unethical to use the estimate for bad debts to purposely manipulate the amount of net income.

Under the allowance method,when a specific account is written off,

Which of the following statements is false regarding promissory notes?

When using the allowance method,year-end adjustments for uncollectible accounts expense must be made.

Accounts receivable and inventory are considered short-term financial assets.

The accounts receivable aging method of estimating uncollectible accounts is in violation of the matching principle.

Having a compensating balance decreases a company's liquidity.

For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation?

Under the allowance method,Uncollectible Accounts Expense is recorded

Trade credit arises from credit sales.

Most operating transactions do not use or generate cash.

It is usually a good business practice to maintain as large a balance in the Cash account as possible.

Days' sales uncollected equals 365 days divided by

A successful credit policy balances an acceptable level of credit losses with the potential for profit from total credit sales.

The maker of a note records Notes Receivable.

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

Match each definition with the correct term below. -Maturity value

Notes payable and cash are examples of short-term financial assets.

What is a contingent liability,and how does it relate to the discounting of a note receivable at the bank?

Which of the following would be deducted from the balance per books on a bank reconciliation?

It is considered unethical to use the estimate for bad debts to purposely manipulate the amount of net income.

Under the allowance method,when a specific account is written off,

Which of the following statements is false regarding promissory notes?

When using the allowance method,year-end adjustments for uncollectible accounts expense must be made.

Accounts receivable and inventory are considered short-term financial assets.

The accounts receivable aging method of estimating uncollectible accounts is in violation of the matching principle.

Having a compensating balance decreases a company's liquidity.

For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation?

Under the allowance method,Uncollectible Accounts Expense is recorded

Trade credit arises from credit sales.

Most operating transactions do not use or generate cash.

It is usually a good business practice to maintain as large a balance in the Cash account as possible.

Days' sales uncollected equals 365 days divided by

A successful credit policy balances an acceptable level of credit losses with the potential for profit from total credit sales.

The maker of a note records Notes Receivable.

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