Question 1

Investments in available-for-sale marketable securities:

Accepted Answer

A)  Only include investments in the capital stock of publicly traded corporations. 
B)  May be reported in the balance sheet at market values lower than cost, but never at values in excess of original cost. 
C)  Are adjusted to current market value at the end of each accounting period. 
D)  Are carried in the accounting records at current market values, and therefore do not generate gains or losses when sold at market values. 
A)  Only include investments in the capital stock of publicly traded corporations. 
B)  May be reported in the balance sheet at market values lower than cost, but never at values in excess of original cost. 
C)  Are adjusted to current market value at the end of each accounting period. 
D)  Are carried in the accounting records at current market values, and therefore do not generate gains or losses when sold at market values.

Question 2

Restricted cash may be available to meet the normal operating needs of a company.

Accepted Answer

A) True 
 B)False

Question 3

Uncollectible accounts
(a.) What is an uncollectible account? Explain how a business suffers losses from uncollectible accounts.
(b.) "A competent credit manager should set credit policies so as to avoid any and all losses from uncollectible accounts." Is this statement accurate? Explain your answer.

Accepted Answer

(a) An uncollectible account is an accou

Question 4

Marketable securities
(a.) Explain how investments in available-for-sale marketable securities are valued in the investor's balance sheet. the objectivity principle?
(c.) What does Unrealized Holding Gain (or Loss) on Investments represent? How is this item reported in the financial statements?

Accepted Answer

(a) Short-term investments in marketable

Question 5

On January 1, Dillon Company had a $3,100 credit balance in the Allowance for Doubtful Accounts. During the year, sales totaled $780,000 and $6,900 of accounts receivable were written off as uncollectible. A December 31 aging of accounts receivable indicated the amount probably uncollectible to be $5,300. (No recoveries of accounts previously written off were made during the year.) Dillon's financial statements for the current year should include:

Accepted Answer

A)  Uncollectible accounts expense of $9,100. 
B)  Uncollectible accounts expense of $5,300. 
C)  Allowance for Doubtful Accounts with a credit balance of $1,500. 
D)  Allowance for Doubtful Accounts with a credit balance of $8,400. 
A)  Uncollectible accounts expense of $9,100. 
B)  Uncollectible accounts expense of $5,300. 
C)  Allowance for Doubtful Accounts with a credit balance of $1,500. 
D)  Allowance for Doubtful Accounts with a credit balance of $8,400.

Question 6

Bank reconciliation
(A.) You are to complete the June 30 bank reconciliation for Silver Company using the following information:

(B.) Give in general journal form the entry or entries necessary to correct Silver's accounting records as of June 30. (Explanations may be omitted; one compound journal entry is acceptable.)

Accepted Answer

The answer of Bank reconciliation
(A.) You are to complete the...

Question 7

Oceanside Company uses the balance sheet approach in estimating uncollectible accounts expense. It has just completed an aging analysis of accounts receivable at December 31, 2009. This analysis disclosed the following information? What is the appropriate balance for Oceanside's Allowance for Doubtful Accounts at December 31, 2009

Accepted Answer

A)  $95,000. 
B)  2% of credit sales in 2009. 
C)  $1,560. 
D)  $2,160. 
A)  $95,000. 
B)  2% of credit sales in 2009. 
C)  $1,560. 
D)  $2,160.

Question 8

The amount of cash that should appear on the balance sheet is equal to the amount of cash on deposit, plus currency, coin, and customers' checks on hand, minus the balance of the Cash Over and Short account.

Accepted Answer

A) True 
 B)False

Question 9

The Allowance for Doubtful Accounts will appear on the:

Accepted Answer

A)  Income statement. 
B)  Balance sheet. 
C)  Cash flow statement. 
D)  Owners' equity statement. 
A)  Income statement. 
B)  Balance sheet. 
C)  Cash flow statement. 
D)  Owners' equity statement.

Question 10

In order to be classified as available-for-sale securities, the investment cannot be held for a period longer than three months.

Accepted Answer

A) True 
 B)False

Question 11

Salem's balance sheet at December 31, 2010 includes which of the following as a result of the sale of land on November 1?

Accepted Answer

A)  Notes Receivable of $900,000 and Interest Receivable of $9,000. 
B)  Notes Receivable of $927,000 and Interest Receivable of $9,000. 
C)  Notes Receivable of $900,000 and Interest Receivable of $27,000. 
D)  Notes Receivable of $900,000 only. 
A)  Notes Receivable of $900,000 and Interest Receivable of $9,000. 
B)  Notes Receivable of $927,000 and Interest Receivable of $9,000. 
C)  Notes Receivable of $900,000 and Interest Receivable of $27,000. 
D)  Notes Receivable of $900,000 only.

Question 12

Under the allowance method, when a receivable that had been previously written off is collected:

Accepted Answer

A)  Net income is increased. 
B)  Net assets are increased. 
C)  Net income and net assets are not affected. 
D)  Net assets and net income are both increased. 
A)  Net income is increased. 
B)  Net assets are increased. 
C)  Net income and net assets are not affected. 
D)  Net assets and net income are both increased.

Question 13

The Allowance for Doubtful Accounts represents:

Accepted Answer

A)  Cash set aside to make up for bad debt losses. 
B)  The amount of uncollectible accounts written off to date. 
C)  The difference between total credit sales and collections on credit sales. 
D)  The difference between the face value of accounts receivable and the net realizable value of accounts receivable. 
A)  Cash set aside to make up for bad debt losses. 
B)  The amount of uncollectible accounts written off to date. 
C)  The difference between total credit sales and collections on credit sales. 
D)  The difference between the face value of accounts receivable and the net realizable value of accounts receivable.

Question 14

The term cash equivalent refers to:

Accepted Answer

A)  An item such as a money order, travelers' check, or check from a customer. 
B)  An account receivable from a reliable customer who has always paid bills within the discount period. 
C)  A guaranteed line of credit at the company's bank. 
D)  Very liquid short-term investments such as U.S. Treasury Bills and commercial paper. 
A)  An item such as a money order, travelers' check, or check from a customer. 
B)  An account receivable from a reliable customer who has always paid bills within the discount period. 
C)  A guaranteed line of credit at the company's bank. 
D)  Very liquid short-term investments such as U.S. Treasury Bills and commercial paper.

Question 15

Hubbard Transport keeps $500 cash on hand in addition to this checking account and has no other bank accounts or cash equivalents. What amount should appear as Cash in Emerald's August 31 balance sheet?

Accepted Answer

A)  $18,430. 
B)  $14,249. 
C)  $17,955. 
D)  Some other amount. 
A)  $18,430. 
B)  $14,249. 
C)  $17,955. 
D)  Some other amount.

Question 16

A compensating balance is often required by a bank as a condition for granting a loan.

Accepted Answer

A) True 
 B)False

Question 17

Reporting cash in the balance sheet
(a.) The first asset shown in the balance sheet of many companies is labeled "cash and cash equivalents." Explain the term "cash equivalent" and give two examples. Why are cash and cash equivalents listed first in the balance sheet?
(b.) The December bank statement for Kowal Publishing Co. reports a balance of $13,847.59 at December 31, 2009. Kowal's accounting records, however, show a balance of $15,245.47 in the same bank account prior to preparation of the bank reconciliation.
Which amount should be included in the amount of cash reported in Kowal's balance sheet at December 31, 2009? Explain your answer.

Accepted Answer

(a) Cash equivalents are very short term

Question 18

Cash management
(a.) What is meant by the term "cash management"?
(b.) Identify at least three basic objectives of effective cash management.

Accepted Answer

(a) The term cash management refers to p

Question 19

Bank reconciliation-classification
Indicate how the following items would be treated in Aladdin's, Inc.'s bank reconciliation. Choose from the following answers:
(a.) Deducted from the balance per accounting records.
(b.) Added to balance per accounting records.
(c.) Deducted from balance per bank statement.
(d.) Added to balance per bank statement.

Accepted Answer

The answer of Bank reconciliation-classification
Indicate how the following items would...

Question 20

At the start of the current year, Minuteman Corporation had a credit balance in the Allowance for Doubtful Accounts of $1,800. During the year a monthly provision of 2% of sales was made for uncollectible accounts. Sales for the year were $600,000, and $5,600 of accounts receivable were written off as worthless. No recoveries of accounts previously written off were made during the year. The year-end financial statements should show:

Accepted Answer

A)  Uncollectible accounts expense of $13,800. 
B)  Allowance for Doubtful Accounts with a credit balance of $8,200. 
C)  Allowance for Doubtful Accounts with a credit balance of $6,400. 
D)  Uncollectible accounts expense of $5,600. 
A)  Uncollectible accounts expense of $13,800. 
B)  Allowance for Doubtful Accounts with a credit balance of $8,200. 
C)  Allowance for Doubtful Accounts with a credit balance of $6,400. 
D)  Uncollectible accounts expense of $5,600.

Exam 7: Financial Assets

Investments in available-for-sale marketable securities:

Restricted cash may be available to meet the normal operating needs of a company.

Marketable securities (a.) Explain how investments in available-for-sale marketable securities are valued in the investor's balance sheet. the objectivity principle? (c.) What does Unrealized Holding Gain (or Loss) on Investments represent? How is this item reported in the financial statements?

The amount of cash that should appear on the balance sheet is equal to the amount of cash on deposit, plus currency, coin, and customers' checks on hand, minus the balance of the Cash Over and Short account.

The Allowance for Doubtful Accounts will appear on the:

In order to be classified as available-for-sale securities, the investment cannot be held for a period longer than three months.

Salem's balance sheet at December 31, 2010 includes which of the following as a result of the sale of land on November 1?

Under the allowance method, when a receivable that had been previously written off is collected:

The Allowance for Doubtful Accounts represents:

The term cash equivalent refers to:

Hubbard Transport keeps $500 cash on hand in addition to this checking account and has no other bank accounts or cash equivalents. What amount should appear as Cash in Emerald's August 31 balance sheet?

A compensating balance is often required by a bank as a condition for granting a loan.

Cash management (a.) What is meant by the term "cash management"? (b.) Identify at least three basic objectives of effective cash management.

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values Answer Key

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