Question 1

Cash equivalents are categorized as short-term investments on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 2

The following data exist for Conner Company:
 $\begin{array}{lll}
& 2010 & 2009 \
\text { Accounts Receivable }  & \$ 80,000 & \$ 90,000 \
\text { Sales }& 533,000 & 410,500
\end{array}$ Calculate the receivable turnover and the average days' sales uncollected for 2010 .

Accepted Answer

Receivable turnover = $533,000

Question 3

On a bank reconciliation, a bank service charge would be deducted from the balance per books.

Accepted Answer

A) True 
 B)False

Question 4

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 5

Securitization delays the receipt of cash from sales made on credit.

Accepted Answer

A) True 
 B)False

Question 6

What is a compensating balance? By whom is it required?

Accepted Answer

A compensating balance is a mi

Question 7

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 8

The allowance for uncollectible accounts is necessary because

Accepted Answer

A)  a liability results when a credit sale is made. 
B)  when recording uncollectible accounts expense, it is not possible to predict specifically which accounts will not be collected. 
C)  management should know how many credit losses have been sustained over the years. 
D)  uncollected accounts that are written off must be accumulated in a separate account. 
A)  a liability results when a credit sale is made. 
B)  when recording uncollectible accounts expense, it is not possible to predict specifically which accounts will not be collected. 
C)  management should know how many credit losses have been sustained over the years. 
D)  uncollected accounts that are written off must be accumulated in a separate account.

Question 9

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

Accepted Answer

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

Question 10

A bank reconciliation begins with the balances as of the beginning of the month.

Accepted Answer

A) True 
 B)False

Question 11

Using the accounts receivable aging method, estimated uncollectible accounts are $50,000. If the balance of the Allowance for Uncollectible Accounts is an $18,000 debit before adjustment, what is the balance after adjustment?

Accepted Answer

A)  $68,000 
B)  $50,000 
C)  $18,000 
D)  $32,000 
A)  $68,000 
B)  $50,000 
C)  $18,000 
D)  $32,000

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

The higher the receivable turnover, the lower the days' sales uncollected.

Accepted Answer

A) True 
 B)False

Question 14

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 $300 check recorded by bank as $200 
B)  Check for $52 recorded as $25 
C)  Deposit of $400 recorded by bank as $100 
D)  Check for $37 recorded as $73 
A)  A returned $300 check recorded by bank as $200 
B)  Check for $52 recorded as $25 
C)  Deposit of $400 recorded by bank as $100 
D)  Check for $37 recorded as $73

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Compute the correct amount for each letter in the following table:
 $\begin{array}{lrrrr}
 & \text { Case 1 } & \text { Case 2 } & \text { Case 3 } & \text { Case 4 } \
\text { Balance per bank statement }& \$ \text { a } & \$ 17,800 & \$ 630 & \$ 3,980 \
\text { Deposits in transit } & 1,200 & \text { b } & 100 & 250 \
\text { Outstanding checks }  & 3,000 & 2,000 & \text { c } & 150 \
\text { Balance per books }& 6,900 & 18,800 & 450 & \text { d }
\end{array}$

Accepted Answer

a. $8,700

Question 17

On a bank reconciliation, a deposit in transit would be added to the balance per bank.

Accepted Answer

A) True 
 B)False

Question 18

Caplan Corporation uses the accounts receivable aging method to account for Uncollectible Accounts Expense. As of December 31, Caplan's accountant prepared the following data about ending receivables: $20,000 was not yet due (1 percent expected not to be collected), $10,000 was 1-60 days past due (4 percent expected not to be collected), and $2,000 was over 60 days past due (8 percent expected not to be collected). At December 31, Allowance for Uncollectible Accounts had a credit balance prior to adjustment of $200. In the journal provided, prepare Caplan's end-of-period adjustment for estimated uncollectible accounts. Also prepare the entry that would have been made had the credit balance instead been a debit balance. Omit explanations

Accepted Answer

The answer of Caplan Corporation uses the accounts receivable aging...

Question 19

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 20

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

Accepted Answer

A) True 
 B)False

Exam 9: Cash and Receivables

Cash equivalents are categorized as short-term investments on the balance sheet.

The following data exist for Conner Company: 2010 2009 Accounts Receivable \ 80,000 \ 90,000 Sales 533,000 410,500 Calculate the receivable turnover and the average days' sales uncollected for 2010 .

On a bank reconciliation, a bank service charge would be deducted from the balance per books.

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

Securitization delays the receipt of cash from sales made on credit.

What is a compensating balance? By whom is it required?

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

The allowance for uncollectible accounts is necessary because

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

A bank reconciliation begins with the balances as of the beginning of the month.

Using the accounts receivable aging method, estimated uncollectible accounts are $50,000. If the balance of the Allowance for Uncollectible Accounts is an $18,000 debit before adjustment, what is the balance after adjustment?

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

The higher the receivable turnover, the lower the days' sales uncollected.

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

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

Compute the correct amount for each letter in the following table: Case 1 Case 2 Case 3 Case 4 Balance per bank statement \ a \ 17,800 \ 630 \ 3,980 Deposits in transit 1,200 b 100 250 Outstanding checks 3,000 2,000 c 150 Balance per books 6,900 18,800 450 d

On a bank reconciliation, a deposit in transit would be added to the balance per bank.

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

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

Completing the Accounting Cycle

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Internal Control

Inventories

Current Liabilities and Fair Value Accounting

Long Term Assets

Contributed Capital

Long Term Liabilities

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Partnerships

The Changing Business Environment-A Managers Pers

Cost Concepts and Cost Allocation

Costing Systems: Job Order Costing

Costing Systems Process Costing

Activity-Based Systems-Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

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