Exam 7: Financial Assets

Shrek Cyclery sells a bicycle to W.O'Connor,a customer who uses Empress Charge (a national credit card,but not issued by a bank).In recording this sale,Shrek Cyclery should record:

If the account Cash Over and Short has a debit balance,it is reported in the balance sheet as a current asset.

The Allowance for Doubtful Accounts will appear on the:

The Kansas Company makes credit sales to customers who use bank credit cards (such as Visa or MasterCard)as well as to customers who use non-bank credit cards (such as American Express or Diner's Club).In this situation:

The accounting records of Golden Company showed cash of $15,250 at June 30.The balance per the bank statement at June 30 was $15,125.The only reconciling items were deposits in transit of $3,200,outstanding checks totaling $4,100,an NSF check for $1,000 returned by the bank which Golden had not yet charged back to the customer,and a bank service charge of $25.The preparation of the bank reconciliation should indicate that Golden's adjusted cash balance at June 30 is:

Bank reconciliation-classification Indicate how the following items would be treated in Aladdin's,Inc.'s bank reconciliation.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.

Randall,Inc.uses the allowance method supported by an aging of its accounts receivable to recognize uncollectible accounts expense in its financial statements.What method of recognizing this expense does Randall use in its income tax return?

Financial assets may be current or long-term assets.

The fair value accounting adjustment:

The accounts receivable turnover rate:

Anthony loaned $2,000 to Cleopatra for one year at 10% interest,all due at maturity.He insisted the terms of the transaction be formalized in a promissory note.In this situation:

When determining the uncollectible accounts expense in computing taxable income,income tax regulations:

Accounting terminology Listed below are nine technical accounting terms emphasized in this chapter. Fair value accounting Factoring Direct write-off Financial asset Cash equivalent Bank reconciliation Allowance for doubtful accounts Accounts receivable turnover Uncollectible accounts expense Each of the following statements may (or may not)describe one of these technical terms.In the space provided below each statement,indicate the accounting term described,or answer "None" if the statement does not correctly describe any of the terms. ______ a.A transaction in which a business sells its accounts receivables to a financial institution. ______ b.An estimate of the portion of year-end accounts receivable that ultimately will turn out to be uncollectible. ______ c.Schedule explaining any differences between cash balances appearing in the accounting records and in the monthly bank statement. ______ d.Balance sheet valuation standard applicable to investments in marketable securities. ______ e.Cash and assets convertible directly into known amounts of cash,such as marketable securities and receivables. ______ f.A ratio,computed by dividing 365 days by average receivables,that indicates the liquidity of the receivables. ______ g.Method of accounting for uncollectible receivables that fails to match revenues and expenses.

When the direct write-off method is used to recognize uncollectible accounts expense,an Allowance for Doubtful Accounts is not required.

When preparing a bank reconciliation,deposits in transit will:

When a company makes a sale by accepting a bank-issued credit card from the customer,the sale is recorded as a cash sale.

Which of the following is not an example of internal control over cash?

An unrealized holding gain on available for sale securities will increase shareholders' equity.

Under the allowance method,when a receivable that had been previously written off is collected:

Industries with relatively high accounts receivable turnover rates include restaurants and hotels.