Exam 7: Financial Assets

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.

An example of good internal control over cash is to have the person responsible for physically handling all cash perform the bank statement reconciliations.

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

Cash equivalents are the most liquid of all assets.

J.Lennon borrows a sum of money from Y.Ono.A promissory note is used to document the terms of the transaction.In this situation:

If a 15%,two-month note receivable is acquired from a customer in settlement of an existing account receivable of $5,000,the accounting entry for acquisition of the note will:

Cardinal Company's bank statement showed a balance at May 31 of $180,974.The only reconciling items consisted of a large number of outstanding checks totaling $51,847.At May 31,what balance should Cardinal's Cash account show?

The unused portion of a line of credit:

The _______________ department compares what was shipped with what was ordered and prepares and mails an invoice.

Marketable securities include investments in bonds and in the capital stocks of publicly traded corporations.

The income statement approach used to estimate uncollectible receivables uses a percentage of net sales without considering the current balance in the Allowance account.

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

U.S.Treasury bills that mature within a period of four to six months are cash equivalents.

Silver Company received a two-month,6% note for $16,000 on August 5.Which of the following statements is true?

Which of the following is not a basic means of achieving internal control over cash receipts?

Internal control over cash transactions (a.)Describe two measures contributing to strong internal control over cash receipts. (b.)Describe two measures contributing to effective internal control over cash disbursements.

In order to maximize sales and profits,effective internal control over receivables ensures that credit is extended to all customers who request credit.

A bank reconciliation explains the differences between:

In general,the longer an account receivable is outstanding,the greater the likelihood it will be collected.

Assuming a 365 day year,Bush Industries calculated an average of 47 days to collect its accounts receivable in 2015.During 2015,Bush's accounts receivable turnover rate: