Question 1

Match each definition with the correct term below.
-Promissory note

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

Which of the following would be added to the balance per books on a bank reconciliation?

Accepted Answer

A)  Deposits in transit 
B)  Outstanding checks 
C)  Collection fee 
D)  Interest income 
A)  Deposits in transit 
B)  Outstanding checks 
C)  Collection fee 
D)  Interest income

Question 3

Securitization expedites the receipt of cash from sales made on credit for a fee.

Accepted Answer

A) True 
 B)False

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 $35,800 of uncollectible accounts.
Using the accounts receivable aging method,the Uncollectible Accounts Expense would be

Accepted Answer

A) $33,800. 
B) $36,800. 
C) $35,800. 
D) $37,800. 
A) $33,800. 
B) $36,800. 
C) $35,800. 
D) $37,800.

Question 5

Customers' accounts with credit balances should be disclosed as a(n)

Accepted Answer

A)  expense on the income statement. 
B)  current liability on the balance sheet. 
C)  offset to Accounts Receivable on the asset side of the balance sheet. 
D)  note to the financial statements. 
A)  expense on the income statement. 
B)  current liability on the balance sheet. 
C)  offset to Accounts Receivable on the asset side of the balance sheet. 
D)  note to the financial statements.

Question 6

Interest on a note receivable may be calculated without knowledge of the

Accepted Answer

A)  principal amount. 
B)  rate of interest. 
C)  note's maturity date. 
D)  note's duration. 
A)  principal amount. 
B)  rate of interest. 
C)  note's maturity date. 
D)  note's duration.

Question 7

Which of the following situations results in a contingent liability?

Accepted Answer

A)  Making a credit card sale 
B)  Dishonoring a note 
C)  Estimating uncollectible accounts expense 
D)  Discounting a note 
A)  Making a credit card sale 
B)  Dishonoring a note 
C)  Estimating uncollectible accounts expense 
D)  Discounting a note

Question 8

Which of the following would be deducted from the balance per bank?

Accepted Answer

A)  An issued check that the company forgot to record on its books 
B)  Bank service charge 
C)  Outstanding checks 
D)  NSF check 
A)  An issued check that the company forgot to record on its books 
B)  Bank service charge 
C)  Outstanding checks 
D)  NSF check

Question 9

The holder of a note adjusts for accrued interest by debiting Interest Receivable and crediting Interest Income.

Accepted Answer

A) True 
 B)False

Question 10

Under the direct charge-off method of dealing with uncollectible accounts,

Accepted Answer

A)  revenues and expenses are properly matched. 
B)  Accounts Receivable is shown on the balance sheet at net realizable value. 
C)  Uncollectible Accounts Expense is recorded in the period of the sale. 
D)  no Allowance for Uncollectible Accounts exists. 
A)  revenues and expenses are properly matched. 
B)  Accounts Receivable is shown on the balance sheet at net realizable value. 
C)  Uncollectible Accounts Expense is recorded in the period of the sale. 
D)  no Allowance for Uncollectible Accounts exists.

Question 11

The most liquid of all assets is

Accepted Answer

A)  cash. 
B)  notes receivable. 
C)  machinery. 
D)  accounts receivable. 
A)  cash. 
B)  notes receivable. 
C)  machinery. 
D)  accounts receivable.

Question 12

Assume that on December 1,a note which has a face value of $18,000,bears interest at 10 percent for 90 days,received from a customer as an extension of his past-due account is dishonored.The entry that would be made to record the dishonor (ignoring interest)is:

Accepted Answer

A)  Notes receivable 18,000
Cash 18,000 
B)  Accounts receivable 18,000
Cash 18,000 
C)  Accounts receivable 18,000
Notes receivable 18,000 
D)  Cash 18,000
Accounts Receivable 18,000 
A)  Notes receivable 18,000
Cash 18,000 
B)  Accounts receivable 18,000
Cash 18,000 
C)  Accounts receivable 18,000
Notes receivable 18,000 
D)  Cash 18,000
Accounts Receivable 18,000

Question 13

Match each definition with the correct term below.
-Contingent liability

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 14

Customers with credit balances in their accounts are entitled to a refund if they do not intend to make any future purchase.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following topics involves a contingent liability?

Accepted Answer

A)  Installment accounts receivable 
B)  A factored accounts receivable with recourse 
C)  Securitization 
D)  A factored accounts receivable without recourse 
A)  Installment accounts receivable 
B)  A factored accounts receivable with recourse 
C)  Securitization 
D)  A factored accounts receivable without recourse

Question 16

Which of the following would not be included in Cash or Cash Equivalents?

Accepted Answer

A)  Sixty-day U.S.Treasury bills held 
B)  Deposits in bank checking accounts 
C)  Checks and money orders received from customers 
D)  Twelve-month certificates of deposit held 
A)  Sixty-day U.S.Treasury bills held 
B)  Deposits in bank checking accounts 
C)  Checks and money orders received from customers 
D)  Twelve-month certificates of deposit held

Question 17

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

Accepted Answer

A)  A deposit in transit 
B)  Outstanding checks 
C)  A bank service charge 
D)  A bank error on the bank statement 
A)  A deposit in transit 
B)  Outstanding checks 
C)  A bank service charge 
D)  A bank error on the bank statement

Question 18

A company that factors its receivables will have a less favorable receivable turnover than a company that does not factor.

Accepted Answer

A) True 
 B)False

Question 19

At year end,Erwin Graphics has a $350 debit balance in Allowance for Uncollectible Accounts.It estimates that 5 percent of the $20,000 in sales are uncollectible.Give the amount that should be used in the adjusting entry using percentage of net sales method to record uncollectible accounts.(Show your calculations.)

Accepted Answer

$1,000 credit to All

Question 20

On a bank reconciliation,an NSF check would be deducted from the balance per book.

Accepted Answer

A) True 
 B)False

Match each definition with the correct term below. -Promissory note

Which of the following would be added to the balance per books on a bank reconciliation?

Securitization expedites the receipt of cash from sales made on credit for a fee.

Customers' accounts with credit balances should be disclosed as a(n)

Interest on a note receivable may be calculated without knowledge of the

Which of the following situations results in a contingent liability?

Which of the following would be deducted from the balance per bank?

The holder of a note adjusts for accrued interest by debiting Interest Receivable and crediting Interest Income.

Under the direct charge-off method of dealing with uncollectible accounts,

The most liquid of all assets is

Assume that on December 1,a note which has a face value of $18,000,bears interest at 10 percent for 90 days,received from a customer as an extension of his past-due account is dishonored.The entry that would be made to record the dishonor (ignoring interest)is:

Match each definition with the correct term below. -Contingent liability

Customers with credit balances in their accounts are entitled to a refund if they do not intend to make any future purchase.

Which of the following topics involves a contingent liability?

Which of the following would not be included in Cash or Cash Equivalents?

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

A company that factors its receivables will have a less favorable receivable turnover than a company that does not factor.

On a bank reconciliation,an NSF check would be deducted from the balance per book.

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. -Promissory note

Which of the following would be added to the balance per books on a bank reconciliation?

Securitization expedites the receipt of cash from sales made on credit for a fee.

Customers' accounts with credit balances should be disclosed as a(n)

Interest on a note receivable may be calculated without knowledge of the

Which of the following situations results in a contingent liability?

Which of the following would be deducted from the balance per bank?

The holder of a note adjusts for accrued interest by debiting Interest Receivable and crediting Interest Income.

Under the direct charge-off method of dealing with uncollectible accounts,

The most liquid of all assets is

Assume that on December 1,a note which has a face value of $18,000,bears interest at 10 percent for 90 days,received from a customer as an extension of his past-due account is dishonored.The entry that would be made to record the dishonor (ignoring interest)is:

Match each definition with the correct term below. -Contingent liability

Customers with credit balances in their accounts are entitled to a refund if they do not intend to make any future purchase.

Which of the following topics involves a contingent liability?

Which of the following would not be included in Cash or Cash Equivalents?

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

A company that factors its receivables will have a less favorable receivable turnover than a company that does not factor.

On a bank reconciliation,an NSF check would be deducted from the balance per book.

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