Question 1

All of the following are nontrade receivables except

Accepted Answer

A)  declared dividends 
B)  advances to executives and employees 
C)  travel advances to employees 
D)  deposits paid to utility companies 
A)  declared dividends 
B)  advances to executives and employees 
C)  travel advances to employees 
D)  deposits paid to utility companies

Question 2

What is a bank reconciliation and what is its importance?

Accepted Answer

The bank reconciliation is the analysis

Question 3

On December 1, the Harrison Company sold $345,000 of its accounts receivable to Happy Finance Company for 85% of their value. A 10% commission on the gross value of the factored accounts was charged, and the factoring was without recourse.
Required: 
a.Prepare the journal entry to record the factoring.
b.Briefly discuss how the factored accounts are disclosed in the financial statements.

Accepted Answer

The answer of On December 1, the Harrison Company sold...

Question 4

A bank reconciliation is a analysis of the difference between the account records and the bank records to ensure the accurate ending cash balance.

Accepted Answer

A) True 
 B)False

Question 5

The estimate of bad debt expense may be based on the historical relationships between actual bad debts incurred and

Accepted Answer

A)  I 
B)  II 
C)  III 
D)  IV 
A)  I 
B)  II 
C)  III 
D)  IV

Question 6

What is the difference between Receivables, Trade Receivables, and Nontrade Receivables?

Accepted Answer

@#IMG-DLM&_TB6205_00

Question 7

On September 1, 2014, Excellent Company received an $80,000, 12%, 120-day note from a credit customer wishing to extend its repayment period. On October 1, 2010, thirty days after the note was received, Excellent discounted the note at the bank at 14%. How much cash did Excellent Company receive from the bank?

Accepted Answer

A)  $80,800 
B)  $80,749 
C)  $80,288 
D)  $79,317 
A)  $80,800 
B)  $80,749 
C)  $80,288 
D)  $79,317

Question 8

Lockern Co. records estimated future sales returns and allowances. Total sales amount to $1,550,000, and, in the past, sales returns and allowances have been 2 1/2% of sales.
Required:
Prepare journal entries to:
a.Record the estimated sales returns and allowances.
b.Record the return of $1,000 of defective furniture.

Accepted Answer

The answer of Lockern Co. records estimated future sales returns...

Question 9

A disadvantage of basing bad debt expense on the historical relationship between actual bad debts and the outstanding accounts receivable balance at the end of the year is that

Accepted Answer

A)  it may not appropriately match current expenses against current revenues 
B)  it provides a reasonable estimate of the accounts receivable net realizable value 
C)  it is not a generally accepted accounting procedure 
D)  it is an income statement approach 
A)  it may not appropriately match current expenses against current revenues 
B)  it provides a reasonable estimate of the accounts receivable net realizable value 
C)  it is not a generally accepted accounting procedure 
D)  it is an income statement approach

Question 10

Gazoo Co. sold goods with a list price of $45,000 (gross billings) on terms of 2/10, n/30 on December 14, 2014. Accounts receivable and sales were recorded using the net method. By December 23, Gazoo had collected on $25,000 (gross billings) of these receivables. On January 2, additional collections were made on sales of $5,000 (gross billings) and sales returns and allowances of $3,000 (gross billings) were granted by Gazoo. On January 15, 2015, all remaining balances were collected.
Required:
Prepare journal entries for the following:
a.Collections received by December 23, net method of accounting for sales discounts.
b.Any required adjustment, December 31, net method.
c.Sales returns and allowances granted on January 2, net method.
d.Collections received on January 15, net method.

Accepted Answer

The answer of Gazoo Co. sold goods with a list...

Question 11

Zeus Inc. recorded credit sales of $1,750,000 during 2015. At December 31, 2015, the company had a $250,000 debit balance in Accounts Receivable and a $13,000 credit balance in Allowance for Doubtful Accounts.
Required: 
a.Prepare the necessary adjusting journal entry at December 31 to record the estimated bad debt expense, assuming that bad debts are estimated at 3% of credit sales.
b.Prepare the necessary adjusting journal entry at December 31 to record the estimated bad debt expense, assuming that bad debts are estimated at 8% of outstanding accounts receivable.
c.Assume that a customer whose $3,300 account had been written off earlier in the year now pays the balance owed in full. Prepare the journal entry, or entries, to record the collection of this customer's account.

Accepted Answer

The answer of Zeus Inc. recorded credit sales of $1,750,000...

Question 12

Current GAAP requires a company to disclose the fair value of its financial instruments and to disclose all significant concentrations of credit risk due to its financial instruments. The FASB's rationale for this disclosure includes allowing readers to

Accepted Answer

A)  better identify major customers 
B)  compute each company's risk 
C)  better determine a company's financial flexibility 
D)  compute liquidity ratios 
A)  better identify major customers 
B)  compute each company's risk 
C)  better determine a company's financial flexibility 
D)  compute liquidity ratios

Question 13

Which of the following conditions must be met by a company (the transferor) to record the transfer of accounts receivable for which it surrenders control to another company as a sale?

Accepted Answer

A)  The transferred assets have been isolated from the transferor (i.e., put beyond the reach of the transferor). 
B)  The transferee obtains the right to exchange (e.g., sell) the transferred assets. 
C)  The transferor does not maintain effective control over the transferred assets through an agreement that entitles and obligates the transferor to repurchase the transferred assets before their maturity. 
D)  All of these conditions must be met. 
A)  The transferred assets have been isolated from the transferor (i.e., put beyond the reach of the transferor). 
B)  The transferee obtains the right to exchange (e.g., sell) the transferred assets. 
C)  The transferor does not maintain effective control over the transferred assets through an agreement that entitles and obligates the transferor to repurchase the transferred assets before their maturity. 
D)  All of these conditions must be met.

Question 14

Prior to the adjusting entry for bad debt expense, Blueberry, Inc.'s balances for Accounts Receivable and Allowances for Doubtful Accounts were $750,000 (debit) and $5,500 (credit), respectively. After the bad debt expense entry was posted, the net realizable value of accounts receivable was $675,000. Bad debt expense for the year

Accepted Answer

A)  cannot be determined from the information given 
B)  was $69,500 
C)  was $75,000 
D)  was $80,500 
A)  cannot be determined from the information given 
B)  was $69,500 
C)  was $75,000 
D)  was $80,500

Question 15

A key element in internal control over cash receipts utilizes two people (dual control).

Accepted Answer

A) True 
 B)False

Question 16

Which item is not considered cash and cash equivalents on the balance sheet?

Accepted Answer

A)  unrestricted funds on deposit with the bank 
B)  money market funds 
C)  post dated checks 
D)  bank drafts 
A)  unrestricted funds on deposit with the bank 
B)  money market funds 
C)  post dated checks 
D)  bank drafts

Question 17

When preparing a bank reconciliation, outstanding checks would be

Accepted Answer

A)  added to the balance per bank statement 
B)  deducted from the balance per company records 
C)  deducted from the balance per bank statement 
D)  added to the balance per company records 
A)  added to the balance per bank statement 
B)  deducted from the balance per company records 
C)  deducted from the balance per bank statement 
D)  added to the balance per company records

Question 18

What two functions are cash control systems subdivided into?

Accepted Answer

A)  Control over cash and control over purchase orders. 
B)  Control over checks and control over invoicing. 
C)  Control over receipts and control over the bank account. 
D)  Control over receipts and control over payments. 
A)  Control over cash and control over purchase orders. 
B)  Control over checks and control over invoicing. 
C)  Control over receipts and control over the bank account. 
D)  Control over receipts and control over payments.

Question 19

To classify a receivable as a current asset it must be collected within one year or the normal operating cycle of the business, whichever is shorter.

Accepted Answer

A) True 
 B)False

Question 20

On a bank reconciliation, customers' checks that are returned for lack of funds would be

Accepted Answer

A)  deducted from the balance per company records 
B)  deducted from the balance per bank statement 
C)  added to the balance per bank statement 
D)  added to the balance per company records 
A)  deducted from the balance per company records 
B)  deducted from the balance per bank statement 
C)  added to the balance per bank statement 
D)  added to the balance per company records

All of the following are nontrade receivables except

What is a bank reconciliation and what is its importance?

A bank reconciliation is a analysis of the difference between the account records and the bank records to ensure the accurate ending cash balance.

The estimate of bad debt expense may be based on the historical relationships between actual bad debts incurred and

What is the difference between Receivables, Trade Receivables, and Nontrade Receivables?

A disadvantage of basing bad debt expense on the historical relationship between actual bad debts and the outstanding accounts receivable balance at the end of the year is that

Current GAAP requires a company to disclose the fair value of its financial instruments and to disclose all significant concentrations of credit risk due to its financial instruments. The FASB's rationale for this disclosure includes allowing readers to

Which of the following conditions must be met by a company (the transferor) to record the transfer of accounts receivable for which it surrenders control to another company as a sale?

A key element in internal control over cash receipts utilizes two people (dual control).

Which item is not considered cash and cash equivalents on the balance sheet?

When preparing a bank reconciliation, outstanding checks would be

What two functions are cash control systems subdivided into?

To classify a receivable as a current asset it must be collected within one year or the normal operating cycle of the business, whichever is shorter.

On a bank reconciliation, customers' checks that are returned for lack of funds would be

The Demand for and Supply of Financial Accounting Information

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Shareholders Equity

The Income Statement and the Statement of Cash Flows

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Current Liabilities and Contingencies

Property, Plant, and Equipment: Acquisition and Subsequent Investments

Depreciation, Depletion, Impairment, and Disposal

Intangibles

Investments and Long-Term Receivables

Financing Liabilities: Bonds and Notes Payable

Contributed Capital

Retained Earnings and Earnings Per Share

Advanced Issues in Revenue Recognition

Accounting for Income Taxes

Accounting for Postretirement Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

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Exam 6: Cash and Receivables

All of the following are nontrade receivables except

What is a bank reconciliation and what is its importance?

A bank reconciliation is a analysis of the difference between the account records and the bank records to ensure the accurate ending cash balance.

The estimate of bad debt expense may be based on the historical relationships between actual bad debts incurred and

What is the difference between Receivables, Trade Receivables, and Nontrade Receivables?

A disadvantage of basing bad debt expense on the historical relationship between actual bad debts and the outstanding accounts receivable balance at the end of the year is that

Current GAAP requires a company to disclose the fair value of its financial instruments and to disclose all significant concentrations of credit risk due to its financial instruments. The FASB's rationale for this disclosure includes allowing readers to

Which of the following conditions must be met by a company (the transferor) to record the transfer of accounts receivable for which it surrenders control to another company as a sale?

A key element in internal control over cash receipts utilizes two people (dual control).

Which item is not considered cash and cash equivalents on the balance sheet?

When preparing a bank reconciliation, outstanding checks would be

What two functions are cash control systems subdivided into?

To classify a receivable as a current asset it must be collected within one year or the normal operating cycle of the business, whichever is shorter.

On a bank reconciliation, customers' checks that are returned for lack of funds would be

The Demand for and Supply of Financial Accounting Information

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Shareholders Equity

The Income Statement and the Statement of Cash Flows

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Current Liabilities and Contingencies

Property, Plant, and Equipment: Acquisition and Subsequent Investments

Depreciation, Depletion, Impairment, and Disposal

Intangibles

Investments and Long-Term Receivables

Financing Liabilities: Bonds and Notes Payable

Contributed Capital

Retained Earnings and Earnings Per Share

Advanced Issues in Revenue Recognition

Accounting for Income Taxes

Accounting for Postretirement Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

Filters