Question 1

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 2

On a balance sheet, what items normally are included in Cash?

Accepted Answer

The items normally included in

Question 3

The Allowance for Uncollectible Accounts is a contra-asset account.

Accepted Answer

A) True 
 B)False

Question 4

Under securitization, a company sells its receivables in batches at a discount.

Accepted Answer

A) True 
 B)False

Question 5

During the month, a company learns that a check it issued has been accidentally destroyed. On the bank reconciliation, the company would

Accepted Answer

A)  deduct the amount from the balance per bank. 
B)  deduct the amount from the balance per books. 
C)  add the amount to the balance per bank. 
D)  add the amount back to the balance per books. 
A)  deduct the amount from the balance per bank. 
B)  deduct the amount from the balance per books. 
C)  add the amount to the balance per bank. 
D)  add the amount back to the balance per books.

Question 6

Use this information to answer the following question. The general ledger account for Accounts Receivable shows a debit balance of $50,000. Allowance for Uncollectible Accounts has a credit balance of $1,000. Net sales for the year were $500,000. In the past, 2 percent of sales have proved uncollectible, and an aging of accounts receivable accounts results in an estimate of $10,700 of uncollectible accounts.
Using the accounts receivable aging method, the Allowance for Uncollectible Accounts balance (after adjustment) would be

Accepted Answer

A)  $9,700. 
B)  $11,200. 
C)  $10,700. 
D)  $11,700. 
A)  $9,700. 
B)  $11,200. 
C)  $10,700. 
D)  $11,700.

Question 7

On a bank reconciliation, interest earned on a checking account should be

Accepted Answer

A)  deducted from the balance per books. 
B)  added to the balance per books. 
C)  added to the balance per bank. 
D)  deducted from the balance per bank. 
A)  deducted from the balance per books. 
B)  added to the balance per books. 
C)  added to the balance per bank. 
D)  deducted from the balance per bank.

Question 8

Cash consists of all of the following except

Accepted Answer

A)  deposits in savings accounts. 
B)  money orders from customers. 
C)  compensating balances. 
D)  IOUs from customers. 
A)  deposits in savings accounts. 
B)  money orders from customers. 
C)  compensating balances. 
D)  IOUs from customers.

Question 9

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 10

Which of the following statements is not true when FLK Company discounts a note receivable to the bank?

Accepted Answer

A)  FLK may ultimately have to pay the bank when the note is due. 
B)  If the maker of the note pays the bank on time, no liability will result to FLK. 
C)  FLK will receive the maturity value from the bank. 
D)  A contingent liability arises for FLK. 
A)  FLK may ultimately have to pay the bank when the note is due. 
B)  If the maker of the note pays the bank on time, no liability will result to FLK. 
C)  FLK will receive the maturity value from the bank. 
D)  A contingent liability arises for FLK.

Question 11

Which of the following methods of recording uncollectible accounts expense would be described best as an income statement method?

Accepted Answer

A)  Both direct charge-off method and accounts receivable aging method 
B)  Direct charge-off method 
C)  Percentage of net sales method 
D)  Accounts receivable aging method 
A)  Both direct charge-off method and accounts receivable aging method 
B)  Direct charge-off method 
C)  Percentage of net sales method 
D)  Accounts receivable aging method

Question 12

Assume that part of accounts and other receivables on Thompson Toys' February 2, 2010, balance sheet is comprised of $43,225,000 of notes receivable. Two notes make up the amount. The first note has a face value of $30,000,000 and bears interest at 7 percent for 90 days. The second note has a face value of $13,225,000 and bears interest at 9 percent for 120 days. Record the journal entry for the collection of the 7 percent note on May 3 and the dishonor of the 9 percent note on June 2. (Omit explanations; assume no interest had been accrued; amounts rounded to nearest dollar.)

Accepted Answer

The answer of Assume that part of accounts and other...

Question 13

A company that uses the allowance method writes off a specific account as uncollectible, but then the customer pays. The entries made upon receiving payment will

Accepted Answer

A)  decrease Cash. 
B)  decrease Accounts Receivable. 
C)  increase Allowance for Uncollectible Accounts. 
D)  decrease Uncollectible Accounts Expense. 
A)  decrease Cash. 
B)  decrease Accounts Receivable. 
C)  increase Allowance for Uncollectible Accounts. 
D)  decrease Uncollectible Accounts Expense.

Question 14

A company has net sales of $50,000 during the year. At year end (before an adjustment is made), Allowance for Uncollectible Accounts has a credit balance of $2,500. If the company estimates that 3 percent of net sales are uncollectible, what is the balance in the allowance account after the year-end adjustment has been made using the percentage of net sales method?

Accepted Answer

A)  $1,500 debit balance 
B)  $1,500 credit balance 
C)  $4,000 credit balance 
D)  $1,000 debit balance 
A)  $1,500 debit balance 
B)  $1,500 credit balance 
C)  $4,000 credit balance 
D)  $1,000 debit balance

Question 15

Cottage Sales Company made most of its sales on credit during its first year of operation, 2010. At the end of the year, accounts receivable amounted to $100,000. On December 31, 2010, management reviewed the collectible status of the accounts receivable. Approximately $6,000 of the $100,000 of accounts receivable were estimated to be uncollectible. As per the accounts receivable aging method the adjusting entry that would be made on December 31 of that year is:

Accepted Answer

The answer of Cottage Sales Company made most of its...

Question 16

Loans to company employees should be classified on the balance sheet as accounts receivable.

Accepted Answer

A) True 
 B)False

Question 17

A company issues a check for $362 but records it as $326. On the bank reconciliation, the $36 error should be

Accepted Answer

A)  deducted from the balance per books. 
B)  added to the balance per bank. 
C)  deducted from the balance per bank. 
D)  added to the balance per books. 
A)  deducted from the balance per books. 
B)  added to the balance per bank. 
C)  deducted from the balance per bank. 
D)  added to the balance per books.

Question 18

The existence of uncollectible accounts is evidence of poor credit policies.

Accepted Answer

A) True 
 B)False

Question 19

Purchasing receivables with recourse is riskier than purchasing them without recourse.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A)  interest income. 
B)  fee for collection of note by bank. 
C)  NSF check of customer. 
D)  deposits in transit. 
A)  interest income. 
B)  fee for collection of note by bank. 
C)  NSF check of customer. 
D)  deposits in transit.

Exam 9: Cash and Receivables

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

On a balance sheet, what items normally are included in Cash?

The Allowance for Uncollectible Accounts is a contra-asset account.

Under securitization, a company sells its receivables in batches at a discount.

During the month, a company learns that a check it issued has been accidentally destroyed. On the bank reconciliation, the company would

On a bank reconciliation, interest earned on a checking account should be

Cash consists of all of the following except

Which of the following situations results in a contingent liability?

Which of the following statements is not true when FLK Company discounts a note receivable to the bank?

Which of the following methods of recording uncollectible accounts expense would be described best as an income statement method?

A company that uses the allowance method writes off a specific account as uncollectible, but then the customer pays. The entries made upon receiving payment will

Loans to company employees should be classified on the balance sheet as accounts receivable.

A company issues a check for $362 but records it as $326. On the bank reconciliation, the $36 error should be

The existence of uncollectible accounts is evidence of poor credit policies.

Purchasing receivables with recourse is riskier than purchasing them without recourse.

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

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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