Exam 7: Financial Assets

Short-term investments in marketable securities may not be reported in the balance sheet at values higher than original cost.

A bank statement shows a balance of $8,445 at June 30. A bank reconciliation is prepared and includes outstanding checks of $2,790, deposits in transit of $1,350, and a bank service charge of $30. Among the paid checks returned by the bank was check no. 900 in the amount of $600, which the company had erroneously recorded in the accounting records as $60. The "adjusted cash balance" at June 30 is:

During preparation of a bank reconciliation, outstanding checks should be:

Windsor uses the income statement approach in estimating uncollectible accounts expense, and uncollectible accounts expense is estimated to be 2% of credit sales. The net realizable value of Windsor's accounts receivable in the January 31 balance sheet is:

Interest received is shown on which section of the statement of cash flows?

Efficient management of cash includes which of the following concepts?

Financial assets:

Each of the following transactions would be reflected in both the income statement and the statement of cash flows for the current period, except:

The Allowance for Doubtful Accounts is a contra-asset account and appears on the balance sheet.

In regard to the accounts receivable turnover rate:

Internal control over cash transactions Listed below are seven errors or problems that might occur in the processing of cash transactions. Also shown is a separate list of internal control procedures. Indicate the internal control procedure that should prevent the error or problem from occurring. If none of the control procedures would effectively prevent the error, place an X in the space provided. Possible Error or Problem _____ 1. A purchase invoice was paid even though the merchandise was never received. _____ 2. An employee issued a credit memorandum for a nonexistent sales return in order to conceal his theft of the amount received in payment of an account receivable. _____ 3. Management is unaware that blank checks are being issued for unauthorized expenditures by the official designated to sign checks. _____ 4. A salesclerk collects the full selling price from a customer but rings up the sale at less than actual price and pockets the difference. _____ 5. Several days' cash receipts are lost in a fire. _____ 6. A new employee often gives customers an incorrect amount of change. _____ 7. No one has discovered that amounts deposited in the company's bank account by the cashier over the last few years are frequently smaller than amounts forwarded to him from the mailroom or sales department. Internal Control Procedures

Assuming a 365 day year, Gore Industries calculated an average of 53 days to collect its accounts receivable in 2007. During 2007, Gore's accounts receivable turnover rate:

On November 1, Willis Corporation sold merchandise in return for a 6%, 90-day note receivable in the amount of $60,000. The proper adjusting entry at December 31 (end of Willis's fiscal year) includes a:

In order to overstate income, a company may fraudulently:

Balance sheet method-computations Rainbow Company uses the balance sheet approach to estimate uncollectible accounts. By aging the customers' accounts, it was estimated that $7,325 of the company's month-end accounts receivable would prove to be uncollectible. Determine the amount that should be debited to the Uncollectible Accounts Expense account in the month-end adjusting entry under each of the following independent assumptions: (a.) Before making any adjustment, the Allowance for Doubtful Accounts has a $635 credit balance. $_______________ (b.) Before making any adjustment, the Allowance for Doubtful Accounts has a debit balance of $720. $_______________

The accounts receivable turnover rate:

On October 1, 2011, Coast Financial lent Barr Corporation $300,000, receiving in exchange a nine-month, 12% note receivable. Coast ends its fiscal year on December 31, and makes adjusting entries to accrue interest earned on all notes receivable. The interest earned on the note receivable from Barr Corporation during 2012 will amount to:

What is the adjusted cash balance in the September 30 bank reconciliation?

All the following are steps included in the preparation of a bank reconciliation except:

With a line of credit, a liability arises: