Question 1

If a promissory note is dishonored,the payee should record interest income.

Accepted Answer

A) True 
 B)False

Question 2

Assume that on August 1,a $6,000,90-day,12 percent note receivable was received from a customer as an extension of his of past - due account.The entry that would be made to record the note is:

Accepted Answer

A)  Notes receivable 6,000
Cash 6,000 
B)  Notes receivable 6,000
Interest Income account 6,000 
C)  Notes receivable 6,000
Accounts receivable 6,000 
D)  Cash 6,000
Accounts receivable 6,000 
A)  Notes receivable 6,000
Cash 6,000 
B)  Notes receivable 6,000
Interest Income account 6,000 
C)  Notes receivable 6,000
Accounts receivable 6,000 
D)  Cash 6,000
Accounts receivable 6,000

Question 3

Match each definition with the correct term below.
-Electronic funds transfer (EFT)

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 4

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

Accepted Answer

A)  Bank error 
B)  Interest income 
C)  Deposit in transit 
D)  Outstanding checks 
A)  Bank error 
B)  Interest income 
C)  Deposit in transit 
D)  Outstanding checks

Question 5

The existence of uncollectible accounts is not evidence of poor credit policies.

Accepted Answer

A) True 
 B)False

Question 6

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 $1,044,000.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 percentage of net sales method,Uncollectible Accounts Expense would be debited for

Accepted Answer

A) $18,880. 
B) $22,880. 
C) $2,000. 
D) $20,880. 
A) $18,880. 
B) $22,880. 
C) $2,000. 
D) $20,880.

Question 7

Which of the following bank reconciliation items would not result in a journal entry?

Accepted Answer

A)  Service charge 
B)  NSF check of customer 
C)  Interest income 
D)  Deposits in transit 
A)  Service charge 
B)  NSF check of customer 
C)  Interest income 
D)  Deposits in transit

Question 8

Under the accounts receivable aging method,the balance in Allowance for Uncollectible Accounts must be considered prior to adjusting for estimated uncollectible accounts.

Accepted Answer

A) True 
 B)False

Question 9

Match each definition with the correct term below.
-Compensating balance

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 10

The sale or transfer of accounts receivable to raise funds is called

Accepted Answer

A)  discounting. 
B)  collateralizing. 
C)  pledging. 
D)  factoring. 
A)  discounting. 
B)  collateralizing. 
C)  pledging. 
D)  factoring.

Question 11

The maturity value of a 60-day,9 percent,$2,000 note receivable is

Accepted Answer

A)  $1,970.33. 
B)  $1,820.89. 
C)  $2,029.59. 
D)  $2,180.12. 
A)  $1,970.33. 
B)  $1,820.89. 
C)  $2,029.59. 
D)  $2,180.12.

Question 12

The interest on a three-month,12 percent,$16,600 note receivable is

Accepted Answer

A)  $498. 
B)  $166. 
C)  $332. 
D)  $1,992. 
A)  $498. 
B)  $166. 
C)  $332. 
D)  $1,992.

Question 13

Which of the following statements is false about factoring without recourse?

Accepted Answer

A)  The seller of the receivables is liable upon default of the debtor. 
B)  The factor's risk is higher than if the factoring were with recourse. 
C)  An example is the use of major credit cards. 
D)  The fee will be higher than if the factoring were with recourse. 
A)  The seller of the receivables is liable upon default of the debtor. 
B)  The factor's risk is higher than if the factoring were with recourse. 
C)  An example is the use of major credit cards. 
D)  The fee will be higher than if the factoring were with recourse.

Question 14

Match each definition with the correct term below.
-Allowance method

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 15

Which of the following is not classified as a short-term financial asset?

Accepted Answer

A)  Accounts Receivable 
B)  Notes Receivable 
C)  Inventory 
D)  Cash 
A)  Accounts Receivable 
B)  Notes Receivable 
C)  Inventory 
D)  Cash

Question 16

Loans to company employees should be classified on the balance sheet as receivables from employees.

Accepted Answer

A) True 
 B)False

Question 17

A company's acceptance of credit cards like Visa is an example of

Accepted Answer

A)  securitization. 
B)  factoring with recourse. 
C)  discounting. 
D)  factoring without recourse. 
A)  securitization. 
B)  factoring with recourse. 
C)  discounting. 
D)  factoring without recourse.

Question 18

On a bank reconciliation,a bank service charge would be added to the balance per books.

Accepted Answer

A) True 
 B)False

Question 19

Using the percentage of net sales method,uncollectible accounts expense for the year is estimated to be $54,000.If the balance of the Allowance for Uncollectible Accounts is an $18,000 credit before adjustment,what is the balance after adjustment?
a.$72,000
b.$38,000
c.$54,000
d.$18,000

Accepted Answer

The answer of Using the percentage of net sales method,uncollectible...

Question 20

Under the allowance method,Uncollectible Accounts Expense is recorded when an individual customer defaults.

Accepted Answer

A) True 
 B)False

If a promissory note is dishonored,the payee should record interest income.

Assume that on August 1,a $6,000,90-day,12 percent note receivable was received from a customer as an extension of his of past - due account.The entry that would be made to record the note is:

Match each definition with the correct term below. -Electronic funds transfer (EFT)

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

The existence of uncollectible accounts is not evidence of poor credit policies.

Which of the following bank reconciliation items would not result in a journal entry?

Under the accounts receivable aging method,the balance in Allowance for Uncollectible Accounts must be considered prior to adjusting for estimated uncollectible accounts.

Match each definition with the correct term below. -Compensating balance

The sale or transfer of accounts receivable to raise funds is called

The maturity value of a 60-day,9 percent,$2,000 note receivable is

The interest on a three-month,12 percent,$16,600 note receivable is

Which of the following statements is false about factoring without recourse?

Match each definition with the correct term below. -Allowance method

Which of the following is not classified as a short-term financial asset?

Loans to company employees should be classified on the balance sheet as receivables from employees.

A company's acceptance of credit cards like Visa is an example of

On a bank reconciliation,a bank service charge would be added to the balance per books.

Using the percentage of net sales method,uncollectible accounts expense for the year is estimated to be $54,000.If the balance of the Allowance for Uncollectible Accounts is an $18,000 credit before adjustment,what is the balance after adjustment? a.$72,000 b.$38,000 c.$54,000 d.$18,000

Under the allowance method,Uncollectible Accounts Expense is recorded when an individual customer defaults.

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

If a promissory note is dishonored,the payee should record interest income.

Assume that on August 1,a $6,000,90-day,12 percent note receivable was received from a customer as an extension of his of past - due account.The entry that would be made to record the note is:

Match each definition with the correct term below. -Electronic funds transfer (EFT)

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

The existence of uncollectible accounts is not evidence of poor credit policies.

Which of the following bank reconciliation items would not result in a journal entry?

Under the accounts receivable aging method,the balance in Allowance for Uncollectible Accounts must be considered prior to adjusting for estimated uncollectible accounts.

Match each definition with the correct term below. -Compensating balance

The sale or transfer of accounts receivable to raise funds is called

The maturity value of a 60-day,9 percent,$2,000 note receivable is

The interest on a three-month,12 percent,$16,600 note receivable is

Which of the following statements is false about factoring without recourse?

Match each definition with the correct term below. -Allowance method

Which of the following is not classified as a short-term financial asset?

Loans to company employees should be classified on the balance sheet as receivables from employees.

A company's acceptance of credit cards like Visa is an example of

On a bank reconciliation,a bank service charge would be added to the balance per books.

Using the percentage of net sales method,uncollectible accounts expense for the year is estimated to be $54,000.If the balance of the Allowance for Uncollectible Accounts is an $18,000 credit before adjustment,what is the balance after adjustment? a.$72,000 b.$38,000 c.$54,000 d.$18,000

Under the allowance method,Uncollectible Accounts Expense is recorded when an individual customer defaults.

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