Exam 7: Receivables and Investments

Why do businesses invest in short-term investments?

The comparative balance sheets of Farmore Corp.for 2014 and 2013 indicate that short-term trade notes receivable increased from $5,000 in 2013 to $75,000 in 2014.How will this change be reported on Farmore's statement of cash flows (Farmore uses the indirect method)?

The mechanism that keeps track of the balances owed by individual customers is called a(n)_________________________.

Evanston Inc.started the year with $35,000 in accounts receivable and ended the year with $50,000 in the account.Describe how information regarding the company's accounts receivable should be reflected on its statement of cash flows,assuming use of the indirect method.

Whispering Pines Company reported the following on its balance sheet at December 31,2014:

Whether investments are reported as current assets or noncurrent assets depends on the company's intent.

Verilux Company sold merchandise to Flight Corp.on November 1,2014,for $10,000.Verilux accepted a promissory note from Flight Corp.for $10,000.The note has a term of 5 months and a stated interest rate of 7%.Verilux's accounting period ends on December 31,2014. What amount should Verilux recognize as interest revenue on December 31,2014?

Megan Farms received a promissory note from a customer on March 1,2014.The face amount of the note is $8,000;the terms are 90 days and 9% interest. What is the total amount of interest that Megan Farms will receive when the note is paid?

The comparative balance sheets for Spring Co.for 2014 and 2013 indicate that accounts receivable decreased during 2014.Spring uses the indirect method of preparing the operating activities section of its statement of cash flows.How will the decrease in accounts receivable be reported on the statement of cash flows?

When using the indirect cash flow method,a decrease in accounts receivable or notes receivable must be _________ to net income to arrive at the increase or decrease in cash flows.

Allowance for Doubtful Accounts represents:

Comfort Shoes received a promissory note from a customer on April 1,2014.The face amount of the note is $2,000;the terms are 12 months and 8% annual interest. How much total interest revenue will Comfort Shoes recognize for the year ended December 31,2014?

Cyprus Corp.received a 7%,6-month promissory note with a face amount of $8,000 from the Mustafa Company for the sale of merchandise on May 1,2014.Cyprus' accounting year-end is December 31. REQUIRED: How much interest income will Cyprus Corp.recognize over the term of the note?

Lasiter Corp.reported net credit sales of $2,000,000 and cost of goods sold of $1,400,000 for 2014.On January 1,2014,accounts receivable was $250,000.Amounts owed by customers increased by $20,000 during 2014.Rounding to two decimal places,what is Lasiter's accounts receivable turnover rate for 2014?

Why are increases in accounts receivable reported as an adjustment to net income in the operating activities section of a statement of cash flows?

The process of assigning a note due in the future to a bank before its maturity date is called ____________________.

The accounts receivable turnover ratio is used to evaluate how well a company does in collecting its accounts receivable.

Beatrice Equipment Beatrice Equipment sells merchandise only on credit.For the year ended December 31,2014,the following data is available: Refer to the data for Beatrice Equipment. Determine the balance of Accounts Receivable at December 31,2014.

What are the effects on the accounting equation from the purchase of a short-term investment?

When Company A buys stock in Company B,Company A is referred to as the investee.