Question 1

The aging of the accounts receivable approach to estimating uncollectible accounts does not:

Accepted Answer

A) Take into consideration the existing balance in the Allowance for Doubtful Accounts. 
B) Utilize a percentage of probable uncollectible accounts for each age group of accounts receivable. 
C) Stress the relationship between uncollectible accounts expense and net sales. 
D) Tend to give a reliable estimate of uncollectible accounts because of the consideration given to the collectability of specific accounts receivable. 
A) Take into consideration the existing balance in the Allowance for Doubtful Accounts. 
B) Utilize a percentage of probable uncollectible accounts for each age group of accounts receivable. 
C) Stress the relationship between uncollectible accounts expense and net sales. 
D) Tend to give a reliable estimate of uncollectible accounts because of the consideration given to the collectability of specific accounts receivable. C

Question 2

At the beginning of the year,Robert Company's Allowance for Doubtful Accounts had a $3,200 credit balance.During January,a provision of 2% of sales was made for uncollectible accounts expense.During January,sales totaled $350,000,and $2,900 of accounts receivable were written off as worthless.No recoveries of accounts previously written off were made during the month.Robert's financial statements for January show:

Accepted Answer

A) Allowance for Doubtful Accounts with a credit balance of $10,200. 
B) Allowance for Doubtful Accounts with a credit balance of $7,300. 
C) Uncollectible Accounts Expense of $9,900. 
D) Uncollectible Accounts Expense of $4,100. 
A) Allowance for Doubtful Accounts with a credit balance of $10,200. 
B) Allowance for Doubtful Accounts with a credit balance of $7,300. 
C) Uncollectible Accounts Expense of $9,900. 
D) Uncollectible Accounts Expense of $4,100. B

Question 3

An unrealized holding loss on available-for-sale securities will reduce net income.

Accepted Answer

A) True 
 B)False  False

Question 4

Match the following terms with the explanations below.If no term fits the explanation write none   _________ (1)A means of accounting for uncollectibles which does not recognize any expense until specific receivables are determined to be worthless.
_________ (2)An account showing the amount of estimated uncollectible receivables.
_________ (3)The process of estimating uncollectible accounts by classifying accounts receivables by age groups.
_________ (4)Dividing net sales by average receivables to create a ratio to measure the liquidity of accounts receivable.
_________ (5)Very short-term liquid investments which must mature within 90 days of acquisition.
_________ (6)Cash and assets convertible directly into known amounts of cash.
_________ (7)An account showing the difference between the cost of an investment in marketable securities and its market value.
_________ (8)The value of a note at its maturity date.
_________ (9)Highly liquid investments that can be sold in organized securities exchanges.

Accepted Answer

(1.)Direct Write Off Method (2.)Allowanc

Question 5

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 31,2015.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 31,2015? Explain your answer.

Accepted Answer

(a)Cash equivalents are very short term

Question 6

In the bank reconciliation,every adjustment to the balance per depositor's records requires a journal entry.

Accepted Answer

A) True 
 B)False

Question 7

A major purpose of using an Allowance for Doubtful Accounts is to recognize uncollectible accounts expense in the same accounting period as the related sales which caused the expense.

Accepted Answer

A) True 
 B)False

Question 8

A promissory note:

Accepted Answer

A) Is a conditional promise in writing to pay on demand or at a future date a definite sum of money. 
B) Is recorded by the maker by crediting Note Receivable. 
C) Is signed by the person promising to pay the note,called the payee. 
D) Will be recorded on both the books of the payee and the maker. 
A) Is a conditional promise in writing to pay on demand or at a future date a definite sum of money. 
B) Is recorded by the maker by crediting Note Receivable. 
C) Is signed by the person promising to pay the note,called the payee. 
D) Will be recorded on both the books of the payee and the maker.

Question 9

Note receivable--journal entries
On September 1,2015,Dental Equipment Corporation sold equipment priced at $350,000 in exchange for a six-month note receivable with an annual interest rate of 12%,all due at maturity.
(a.)Prepare the December 31,2015 (fiscal year-end),adjusting entry made by Dental with regard to this note receivable.
(b.)Prepare the entry made by Dental on March 1,2016 (maturity date of note),to record collection of note and interest.   (c.)Assume that on March 1,2016,the maker of the note defaults and Dental does not collect the note.Prepare the entry to be made to Dental on March 1,2016,in this situation.

Accepted Answer

The answer of Note receivable--journal entries
On September 1,2015,Dental Equipment Corporation...

Question 10

Bank reconciliation-classification
Indicate how the following items would be treated in a bank reconciliation.You may 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 11

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: $220,000

Question 12

The _______________ department ensures that the goods shipped match those ordered by the customer.

Accepted Answer

A) Customer Order 
B) Billing 
C) Accounting 
D) Shipping 
A) Customer Order 
B) Billing 
C) Accounting 
D) Shipping

Question 13

Which of the following is not considered a cash equivalent?

Accepted Answer

A) U.S.Treasury bills. 
B) Money market funds. 
C) Accounts receivable. 
D) High-grade commercial paper. 
A) U.S.Treasury bills. 
B) Money market funds. 
C) Accounts receivable. 
D) High-grade commercial paper.

Question 14

When preparing a bank reconciliation,an NSF check will:

Accepted Answer

A) Increase the balance per depositor's records. 
B) Decrease the balance per depositor's records. 
C) Increase the balance per the bank statement. 
D) Decrease the balance per the bank statement. 
A) Increase the balance per depositor's records. 
B) Decrease the balance per depositor's records. 
C) Increase the balance per the bank statement. 
D) Decrease the balance per the bank statement.

Question 15

Effective internal control over accounts receivable ensures:

Accepted Answer

A) That credit is only extended to customers that meet the company's credit standards. 
B) That an approved factor is used when the company sells its accounts receivable. 
C) There is an accurate accounting for cash receipts,cash disbursements,and cash balances. 
D) The availability of adequate cash for conducting business operations. 
A) That credit is only extended to customers that meet the company's credit standards. 
B) That an approved factor is used when the company sells its accounts receivable. 
C) There is an accurate accounting for cash receipts,cash disbursements,and cash balances. 
D) The availability of adequate cash for conducting business operations.

Question 16

Watins,Inc.'s 2015 income statement reported net sales of $5,000,000.Watin's average accounts receivable during 2015 amounted to $450,000.Using 360 days to a year,Watin's:

Accepted Answer

A) Accounts receivable turnover rate is approximately 13.8 times. 
B) Accounts receivable turnover rate is approximately 1.25 times. 
C) Average number of days to collect an account receivable is 32 days. 
D) Accounts receivable turnover rate is approximately 2 times. 
A) Accounts receivable turnover rate is approximately 13.8 times. 
B) Accounts receivable turnover rate is approximately 1.25 times. 
C) Average number of days to collect an account receivable is 32 days. 
D) Accounts receivable turnover rate is approximately 2 times.

Question 17

When doing a bank reconciliation,an NSF check will reduce the bank's balance.

Accepted Answer

A) True 
 B)False

Question 18

Joe Costello handles cash receipts from customers and also has responsibility for issuing credit memoranda,writing off uncollectible accounts,and maintaining the accounts receivable records.When customers pay their accounts,Costello occasionally issues a credit memorandum and steals the cash received from the customer.This fraud should come to light if an employee other than Costello:

Accepted Answer

A) Reconciles the bank statement to the accounting records. 
B) Reconciles the accounts receivable subsidiary ledger to the accounts receivable controlling account. 
C) Investigates weekly all accounts written off as uncollectible. 
D) Reconciles credit memoranda for sales returns to returned merchandise accepted by the receiving department. 
A) Reconciles the bank statement to the accounting records. 
B) Reconciles the accounts receivable subsidiary ledger to the accounts receivable controlling account. 
C) Investigates weekly all accounts written off as uncollectible. 
D) Reconciles credit memoranda for sales returns to returned merchandise accepted by the receiving department.

Question 19

Each of these categories of assets is normally shown in the balance sheet at current value,except:

Accepted Answer

A) Inventories. 
B) Accounts receivable. 
C) Short-term investments in marketable securities. 
D) Cash. 
A) Inventories. 
B) Accounts receivable. 
C) Short-term investments in marketable securities. 
D) Cash.

Question 20

Cash equivalents include money market funds,U.S.Treasury bills,and high-grade commercial paper.

Accepted Answer

A) True 
 B)False

Exam 7: Financial Assets

The aging of the accounts receivable approach to estimating uncollectible accounts does not:

An unrealized holding loss on available-for-sale securities will reduce net income.

In the bank reconciliation,every adjustment to the balance per depositor's records requires a journal entry.

A major purpose of using an Allowance for Doubtful Accounts is to recognize uncollectible accounts expense in the same accounting period as the related sales which caused the expense.

A promissory note:

The _______________ department ensures that the goods shipped match those ordered by the customer.

Which of the following is not considered a cash equivalent?

When preparing a bank reconciliation,an NSF check will:

Effective internal control over accounts receivable ensures:

Watins,Inc.'s 2015 income statement reported net sales of $5,000,000.Watin's average accounts receivable during 2015 amounted to $450,000.Using 360 days to a year,Watin's:

When doing a bank reconciliation,an NSF check will reduce the bank's balance.

Each of these categories of assets is normally shown in the balance sheet at current value,except:

Cash equivalents include money market funds,U.S.Treasury bills,and high-grade commercial paper.

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

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