Question 1

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

Accepted Answer

A)  $16,237. 
B)  $12,580. 
C)  $9,513. 
D)  $5,856. 
A)  $16,237. 
B)  $12,580. 
C)  $9,513. 
D)  $5,856.

Question 2

The journal entry on January 31 to record replenishment of the petty cash fund includes:

Accepted Answer

A)  A credit to Petty Cash for $575. 
B)  Debits to various expenses totaling $575. 
C)  A debit to Petty Cash for $575. 
D)  A debit to Cash for $575. 
A)  A credit to Petty Cash for $575. 
B)  Debits to various expenses totaling $575. 
C)  A debit to Petty Cash for $575. 
D)  A debit to Cash for $575.

Question 3

Non U. S. companies can never be compared to U. S. Companies because non U. S. companies use foreign currencies.

Accepted Answer

A) True 
 B)False

Question 4

If Four Star uses the balance sheet approach in estimating uncollectible accounts, and aging the accounts receivable indicates the estimated uncollectible portion to be $24,000, the uncollectible accounts expense for the month is:

Accepted Answer

A)  $24,000. 
B)  $13,250. 
C)  $34,750. 
D)  $10,750. 
A)  $24,000. 
B)  $13,250. 
C)  $34,750. 
D)  $10,750.

Question 5

Which of the following does not contribute toward achieving internal control over cash payments?

Accepted Answer

A)  The practice of making small cash disbursements directly from the current day's cash receipts. 
B)  The use of a voucher system. 
C)  The use of a petty cash fund. 
D)  The practice of approving every expenditure before the cash disbursement is made. 
A)  The practice of making small cash disbursements directly from the current day's cash receipts. 
B)  The use of a voucher system. 
C)  The use of a petty cash fund. 
D)  The practice of approving every expenditure before the cash disbursement is made.

Question 6

The necessary adjustment to Hubbard Transport's accounting records as of August 31 includes a net:

Accepted Answer

A)  Increase to Cash of $5,241. 
B)  Increase to Cash of $3,240. 
C)  Increase to Cash of $3,681. 
D)  Decrease to Cash of $35. 
A)  Increase to Cash of $5,241. 
B)  Increase to Cash of $3,240. 
C)  Increase to Cash of $3,681. 
D)  Decrease to Cash of $35.

Question 7

The mark-to-market valuation principle:

Accepted Answer

A)  Adheres to the cost principle. 
B)  Adheres to conservatism. 
C)  Does not adhere to the cost principle or conservatism. 
D)  Adheres to both the cost principle and conservatism. 
A)  Adheres to the cost principle. 
B)  Adheres to conservatism. 
C)  Does not adhere to the cost principle or conservatism. 
D)  Adheres to both the cost principle and conservatism.

Question 8

Financial assets
(a.) Briefly explain what is meant by the term "financial assets."
(b.) List the three major categories of assets comprising a company's financial assets. For each category, indicate the basis for valuation in the balance sheet.

Accepted Answer

(a) The term financial assets refers to

Question 9

When a promissory note is issued, you would expect to find:

Accepted Answer

A)  Notes payable and interest expense in the financial statements of the maker of the note throughout the life of the note. 
B)  Notes receivable and interest revenue in the financial statements of the maker of the note throughout the life of the note. 
C)  Notes receivable in the financial statements of the maker of the note throughout the life of the note, but interest revenue only when interest payments are received. 
D)  Notes payable in the financial statements of the payee of the note throughout the life of the note, but interest expense only when interest payments are made. 
A)  Notes payable and interest expense in the financial statements of the maker of the note throughout the life of the note. 
B)  Notes receivable and interest revenue in the financial statements of the maker of the note throughout the life of the note. 
C)  Notes receivable in the financial statements of the maker of the note throughout the life of the note, but interest revenue only when interest payments are received. 
D)  Notes payable in the financial statements of the payee of the note throughout the life of the note, but interest expense only when interest payments are made.

Question 10

Tutor uses the income statement approach in estimating uncollectible accounts expense, and uncollectible accounts expense is estimated to be 3% of credit sales. What is the amount of uncollectible accounts expense recognized in Tutor's income statement for March?

Accepted Answer

A)  $13,500. 
B)  $18,000. 
C)  $8,600. 
D)  $7,200. 
A)  $13,500. 
B)  $18,000. 
C)  $8,600. 
D)  $7,200.

Question 11

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

Accepted Answer

A)  Outstanding checks. 
B)  Interest earned on the average balance of the checking account. 
C)  Check no. 824, in the amount of $620.30, is recorded by the bank as $602.30. 
D)  Deposits in transit. 
A)  Outstanding checks. 
B)  Interest earned on the average balance of the checking account. 
C)  Check no. 824, in the amount of $620.30, is recorded by the bank as $602.30. 
D)  Deposits in transit.

Question 12

Information for the Hooper Company is as follows:
$\begin{array}{|l|r|}
\hline \text { Accounts Receivable at March 31, 2009 } & \$ 9,000 \
\hline \text { Allowance for Doubtful Accounts (Credit balance) } & \$ 2,000 \
\hline \text { Net Sales ( } 85 \% \text { on credit) for year ending 12/31/09 } & \$ 100,000\\hline
\end{array}$
(1) What is the amount of uncollectible account expense for 2009 if the company uses the Percentage of Sales method and 2% of credit sales are deemed uncollectible?
(2) What is the amount of uncollectible expense if the company uses the balance sheet approach and estimates $2,200 as uncollectible in 2009?
(3) What is the net realizable value of accounts receivable if the company uses the balance sheet approach?
(4) If the company writes-off a receivable of $450 what will be the net realizable value of accounts receivable after the write off?

Accepted Answer

(1) $1,700 ($100,000 x 85%) x

Question 13

When the maker of a note defaults:

Accepted Answer

A)  An account receivable is recorded for the principal amount of the note only. 
B)  An account receivable is recorded in the amount of the principal plus interest through the maturity date. 
C)  Any interest earned for the current period is not recorded, since the maker has defaulted. 
D)  Any interest earned in a previous period that has already been recorded as interest receivable is written off as a loss due to the maker's default. 
A)  An account receivable is recorded for the principal amount of the note only. 
B)  An account receivable is recorded in the amount of the principal plus interest through the maturity date. 
C)  Any interest earned for the current period is not recorded, since the maker has defaulted. 
D)  Any interest earned in a previous period that has already been recorded as interest receivable is written off as a loss due to the maker's default.

Question 14

Which of the following practices best illustrates efficient management of cash?

Accepted Answer

A)  The accountant records all cash receipts and payments when reconciling the bank account at the end of each month. 
B)  Management arranges for a loan to cover projected cash shortages during the production phase of the business cycle each year. 
C)  Cash budgets (forecasts) are prepared only one month in advance in order to avoid the need for constant revision. 
D)  All cash resources are held in the checking account to maximize liquidity. 
A)  The accountant records all cash receipts and payments when reconciling the bank account at the end of each month. 
B)  Management arranges for a loan to cover projected cash shortages during the production phase of the business cycle each year. 
C)  Cash budgets (forecasts) are prepared only one month in advance in order to avoid the need for constant revision. 
D)  All cash resources are held in the checking account to maximize liquidity.

Question 15

The proper adjusting entry at December 31, 2009, with regard to this note receivable includes a:

Accepted Answer

A)  Debit to Cash of $6,067. 
B)  Debit to Notes Receivable of $10,400. 
C)  Credit to Interest Revenue of $10,400. 
D)  Debit to Accrued Interest Receivable of $6,067. 
A)  Debit to Cash of $6,067. 
B)  Debit to Notes Receivable of $10,400. 
C)  Credit to Interest Revenue of $10,400. 
D)  Debit to Accrued Interest Receivable of $6,067.

Question 16

Bert had accounts receivable of $280,000 and an allowance for doubtful accounts of $10,800 just before writing off as worthless an account receivable from Ernie Company of $1,600. After writing off this receivable what would be the balance in Bert's Allowance for Doubtful Accounts?

Accepted Answer

A)  $10,800 credit balance. 
B)  $12,400 credit balance. 
C)  $9,200 credit balance. 
D)  $9,200 debit balance. 
A)  $10,800 credit balance. 
B)  $12,400 credit balance. 
C)  $9,200 credit balance. 
D)  $9,200 debit balance.

Question 17

In Hubbard's completed bank reconciliation at August 31, what dollar amount should be deducted from the balance per depositor's records (indicated by 4 above)?

Accepted Answer

A)  $2,254. 
B)  $2,001. 
C)  $1,525. 
D)  $1,560. 
A)  $2,254. 
B)  $2,001. 
C)  $1,525. 
D)  $1,560.

Question 18

If a 5%, 120-day note receivable is acquired from a customer in settlement of an existing account receivable of $50,000, the accounting entry for acquisition of the note will:

Accepted Answer

A)  Include a debit to Notes Receivable for $50,822. 
B)  Include a debit to Notes Receivable for $50,208. 
C)  Include a credit to Interest Revenue for $822. 
D)  Include a debit to Notes Receivable for $50,000 and no entry for interest. 
A)  Include a debit to Notes Receivable for $50,822. 
B)  Include a debit to Notes Receivable for $50,208. 
C)  Include a credit to Interest Revenue for $822. 
D)  Include a debit to Notes Receivable for $50,000 and no entry for interest.

Question 19

After aging its accounts receivable at December 31, Howland Company estimates that $68,000 of the $835,000 outstanding accounts receivable will prove uncollectible. The Allowance for Doubtful Accounts has a debit balance of $6,200 prior to adjustment. In the space provided, prepare the adjusting entry required by Huey in this situation:
 $$\begin{array} { | l | l | l | l | } 
\hline \text { Dec. 31 } & & & \
\hline & & & \
\hline & & & \
\hline & & & \
\hline & & & \
\hline & & & \
\hline
\end{array}$$

Accepted Answer

The answer of After aging its accounts receivable at December...

Question 20

On May 1, 2011 (maturity date), the note is collected in full by Salem Corporation. Assuming a fiscal year-end of December 31, Salem recognizes which of the following in its income statement for 2011 with regard to this note?

Accepted Answer

A)  $927,000 sales revenue. 
B)  $27,000 interest revenue. 
C)  $18,000 interest revenue. 
D)  $9,000 interest revenue. 
A)  $927,000 sales revenue. 
B)  $27,000 interest revenue. 
C)  $18,000 interest revenue. 
D)  $9,000 interest revenue.

Exam 7: Financial Assets

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

The journal entry on January 31 to record replenishment of the petty cash fund includes:

Non U. S. companies can never be compared to U. S. Companies because non U. S. companies use foreign currencies.

If Four Star uses the balance sheet approach in estimating uncollectible accounts, and aging the accounts receivable indicates the estimated uncollectible portion to be $24,000, the uncollectible accounts expense for the month is:

Which of the following does not contribute toward achieving internal control over cash payments?

The necessary adjustment to Hubbard Transport's accounting records as of August 31 includes a net:

The mark-to-market valuation principle:

Financial assets (a.) Briefly explain what is meant by the term "financial assets." (b.) List the three major categories of assets comprising a company's financial assets. For each category, indicate the basis for valuation in the balance sheet.

When a promissory note is issued, you would expect to find:

Tutor uses the income statement approach in estimating uncollectible accounts expense, and uncollectible accounts expense is estimated to be 3% of credit sales. What is the amount of uncollectible accounts expense recognized in Tutor's income statement for March?

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

When the maker of a note defaults:

Which of the following practices best illustrates efficient management of cash?

The proper adjusting entry at December 31, 2009, with regard to this note receivable includes a:

Bert had accounts receivable of $280,000 and an allowance for doubtful accounts of $10,800 just before writing off as worthless an account receivable from Ernie Company of $1,600. After writing off this receivable what would be the balance in Bert's Allowance for Doubtful Accounts?

In Hubbard's completed bank reconciliation at August 31, what dollar amount should be deducted from the balance per depositor's records (indicated by 4 above)?

If a 5%, 120-day note receivable is acquired from a customer in settlement of an existing account receivable of $50,000, the accounting entry for acquisition of the note will:

On May 1, 2011 (maturity date), the note is collected in full by Salem Corporation. Assuming a fiscal year-end of December 31, Salem recognizes which of the following in its income statement for 2011 with regard to this note?

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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