Exam 7: Financial Assets

Internal control will aid in achieving accurate accounting for cash.

J. Lennon borrows a sum of money from Y. Ono. A promissory note is used to document the terms of the transaction. In this situation:

On January 1, Wilson Company established a petty cash fund of $400. The journal entry to record the replenishment of the fund for $280 at the end of January includes:

Uncollectible accounts--two methods At the end of the year the unadjusted trial balance of Angel Provisions included the following accounts: (a.) If Angel uses the balance sheet approach to estimate uncollectible accounts expense, and aging the accounts receivable indicates the estimated uncollectible portion to be $6,075, what will the uncollectible accounts expense for the year be? (b.) If the income statement approach to estimating uncollectible accounts expense is followed, and uncollectible accounts expense is estimated to be 1% of net credit sales, what is the amount of uncollectible accounts expense for the year?

The lower the accounts receivable turnover rate, the longer a company must wait to collect from its credit customers.

In order to achieve internal control over cash receipts:

The journal entry on January 1 to record establishment of the petty cash fund includes a:

The first step in a bank reconciliation is to update the depositor's accounting records for any deposits-in-transit.

Which of the following items on a bank reconciliation may not have been known to the depositor until the bank statement had arrived?

Cash equivalents are the most liquid of assets.

In Hubbard's completed bank reconciliation at August 31, what dollar amount should be added to the balance per depositor's records (indicated by 3 above)?

Shrek Cyclery sells a bicycle to W. O'Connor, a customer who uses Empress Charge (a national credit card, but not issued by a bank). In recording this sale, Shrek Cyclery should record:

In order to hold each department manager accountable for monthly cash transactions, a business will often prepare:

When doing a bank reconciliation, an NSF check will reduce the bank's balance.

A credit memoranda from a bank indicates that they have decreased the depositor's cash balance.

The Allowance for Doubtful Accounts is called a valuation account, or contra-asset account, and normally has a credit balance.

When reading a bank statement, which reference indicates an increase in the cash balance?

Which of the following is not a basic means of achieving internal control over cash receipts?

The purpose of the mark-to-market adjustment for securities classified as "available-for-sale" is:

Notes receivable-computations Complete the following statements about promissory notes and interest by entering amounts in the spaces provided. (Use 360 days in one year.)