Question 1

A debit memoranda from a bank indicates that they have decreased your cash balance.

Accepted Answer

A) True 
 B)False

Question 2

Varsity Corporation sold available-for-sale marketable securities costing $800,000 for $860,000 cash. This transaction is reported in Varsity's income statement and statement of cash flows, respectively, as:

Accepted Answer

A)  A $60,000 gain and a $60,000 cash receipt. 
B)  A $860,000 gain and a $60,000 cash receipt. 
C)  A $60,000 gain and a $860,000 cash receipt. 
D)  A $860,000 gain and a $860,000 cash receipt. 
A)  A $60,000 gain and a $60,000 cash receipt. 
B)  A $860,000 gain and a $60,000 cash receipt. 
C)  A $60,000 gain and a $860,000 cash receipt. 
D)  A $860,000 gain and a $860,000 cash receipt.

Question 3

The mark-to-market adjustment for investments classified as "available for sale" affects:

Accepted Answer

A)  The balance sheet. 
B)  The income statement. 
C)  The cash flow statement. 
D)  All of the above. 
A)  The balance sheet. 
B)  The income statement. 
C)  The cash flow statement. 
D)  All of the above.

Question 4

Evaluating the quality of receivables
(a.) The 2010 annual report of Modern Books, a publicly traded corporation, reports accounts receivable (net of allowance for doubtful accounts), of $190,714 as of February 28, 2010. What assurance do readers of Modern Books' annual report have that these receivables really exist and are not fictitious assets recorded to make the balance sheet "look good"?
(b.) The accounts receivable turnover rate is frequently used in evaluating the liquidity of accounts receivable. How is the accounts receivable turnover rate computed? What type of information does the accounts receivable turnover rate provide?

Accepted Answer

(a) The financial statements of publicly

Question 5

Accounts receivable are classified as current assets:

Accepted Answer

A)  Only if convertible into cash within 60 days or sooner. 
B)  Only if the allowance method is used to estimate the uncollectible accounts. 
C)  Only if convertible into cash within one year. 
D)  Whenever the accounts receivable arise from "normal" sales of merchandise to customers, regardless of the credit terms. 
A)  Only if convertible into cash within 60 days or sooner. 
B)  Only if the allowance method is used to estimate the uncollectible accounts. 
C)  Only if convertible into cash within one year. 
D)  Whenever the accounts receivable arise from "normal" sales of merchandise to customers, regardless of the credit terms.

Question 6

A bank reconciliation explains the differences between:

Accepted Answer

A)  Cash receipts and cash disbursements for the period. 
B)  The balance of cash in the bank and the budgeted expenditures for the upcoming accounting period. 
C)  The balance per bank statement and the cash balance per the accounting records of the depositor. 
D)  The balance per bank statement and cash expected to be on hand according to the cash forecast. 
A)  Cash receipts and cash disbursements for the period. 
B)  The balance of cash in the bank and the budgeted expenditures for the upcoming accounting period. 
C)  The balance per bank statement and the cash balance per the accounting records of the depositor. 
D)  The balance per bank statement and cash expected to be on hand according to the cash forecast.

Question 7

On January 1, Wong Company established a petty cash fund of $300. The journal entry to record the replenishment of the fund for $260 at the end of January includes:

Accepted Answer

A)  A debit to Petty Cash of $260. 
B)  A credit to Cash of $260. 
C)  A debit to various expenses of $40. 
D)  No journal entry; an entry is needed only when the petty cash fund is created or discontinued. 
A)  A debit to Petty Cash of $260. 
B)  A credit to Cash of $260. 
C)  A debit to various expenses of $40. 
D)  No journal entry; an entry is needed only when the petty cash fund is created or discontinued.

Question 8

What is the total amount of outstanding checks at January 31?

Accepted Answer

A)  $1,048. 
B)  $868. 
C)  $1,900. 
D)  $1,720. 
A)  $1,048. 
B)  $868. 
C)  $1,900. 
D)  $1,720.

Question 9

Write-off of uncollectible account receivable
On January 10, Winston, Inc.'s trial balance included the following accounts:
  
On January 11, Len Palmer, a major customer, declares bankruptcy and thus, Winston determines that a receivable from Palmer in the amount of $3,400 is worthless.
(a) In the space provided, prepare the journal entry that Winston should record to write-off the account receivable from Len Palmer on January 11.
 
(b) Compute the net realizable value of Winston's accounts receivable at each of the following dates:
January 10 (before write-off of Palmer's account) $_______________
January 11 (immediately after write-off of Palmers' account) $_______________

Accepted Answer

@#IMG-DLM&
(b) Jan. 10: $220,0

Question 10

As of December 31, 2011, Chippewa Company has $26,440 cash in its checking account, as well as several other items listed below: What amount should be shown in Chippewa's December 31, 2011, balance sheet as "Cash and cash equivalents"?

Accepted Answer

A)  $30,040. 
B)  $139,640. 
C)  $209,640. 
D)  $59,640. 
A)  $30,040. 
B)  $139,640. 
C)  $209,640. 
D)  $59,640.

Question 11

Accounts receivable appear in the balance sheet:

Accepted Answer

A)  As current assets, combined with cash and cash equivalents. 
B)  As current assets, immediately after cash and cash equivalents. 
C)  As either current assets or noncurrent assets, depending on whether the allowance method or the direct write-off method is used to account for uncollectible accounts. 
D)  Only if the balance sheet method of estimating uncollectible accounts is used. 
A)  As current assets, combined with cash and cash equivalents. 
B)  As current assets, immediately after cash and cash equivalents. 
C)  As either current assets or noncurrent assets, depending on whether the allowance method or the direct write-off method is used to account for uncollectible accounts. 
D)  Only if the balance sheet method of estimating uncollectible accounts is used.

Question 12

Which of the following items would cause cash per the bank statement to be larger than the balance of cash shown in the accounting records?

Accepted Answer

A)  Bank service charges. 
B)  Deposits in transit. 
C)  Outstanding checks. 
D)  NSF check from one of the depositor's customers. 
A)  Bank service charges. 
B)  Deposits in transit. 
C)  Outstanding checks. 
D)  NSF check from one of the depositor's customers.

Question 13

Tutor uses the income statement approach in estimating uncollectible accounts expense, and uncollectible accounts expense is estimated to be 3% of credit sales. The net realizable value of Tutor's accounts receivable in the March 31 balance sheet is:

Accepted Answer

A)  $251,800. 
B)  $253,500. 
C)  $224,700. 
D)  $255,300. 
A)  $251,800. 
B)  $253,500. 
C)  $224,700. 
D)  $255,300.

A debit memoranda from a bank indicates that they have decreased your cash balance.

Varsity Corporation sold available-for-sale marketable securities costing $800,000 for $860,000 cash. This transaction is reported in Varsity's income statement and statement of cash flows, respectively, as:

The mark-to-market adjustment for investments classified as "available for sale" affects:

Accounts receivable are classified as current assets:

A bank reconciliation explains the differences between:

On January 1, Wong Company established a petty cash fund of $300. The journal entry to record the replenishment of the fund for $260 at the end of January includes:

What is the total amount of outstanding checks at January 31?

As of December 31, 2011, Chippewa Company has $26,440 cash in its checking account, as well as several other items listed below: What amount should be shown in Chippewa's December 31, 2011, balance sheet as "Cash and cash equivalents"?

Accounts receivable appear in the balance sheet:

Which of the following items would cause cash per the bank statement to be larger than the balance of cash shown in the accounting records?

Tutor uses the income statement approach in estimating uncollectible accounts expense, and uncollectible accounts expense is estimated to be 3% of credit sales. The net realizable value of Tutor's accounts receivable in the March 31 balance sheet is:

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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Exam 7: Financial Assets

A debit memoranda from a bank indicates that they have decreased your cash balance.

Varsity Corporation sold available-for-sale marketable securities costing $800,000 for $860,000 cash. This transaction is reported in Varsity's income statement and statement of cash flows, respectively, as:

The mark-to-market adjustment for investments classified as "available for sale" affects:

Accounts receivable are classified as current assets:

A bank reconciliation explains the differences between:

On January 1, Wong Company established a petty cash fund of $300. The journal entry to record the replenishment of the fund for $260 at the end of January includes:

What is the total amount of outstanding checks at January 31?

As of December 31, 2011, Chippewa Company has $26,440 cash in its checking account, as well as several other items listed below: What amount should be shown in Chippewa's December 31, 2011, balance sheet as "Cash and cash equivalents"?

Accounts receivable appear in the balance sheet:

Which of the following items would cause cash per the bank statement to be larger than the balance of cash shown in the accounting records?

Tutor uses the income statement approach in estimating uncollectible accounts expense, and uncollectible accounts expense is estimated to be 3% of credit sales. The net realizable value of Tutor's accounts receivable in the March 31 balance sheet is:

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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