Exam 7: Financial Assets

On December 30,2015,Varsity Corporation sold available for sale marketable securities costing $800,000 for $860,000 cash.The securities were purchased on January 2,2013 and the market value of the securities on December 31,2013 and December 31,2014 was $820,000 and $780,000,respectively.How much gain or loss will Varsity report in its income statement for the year ending December 31,2015?

Sales to customers using bank credit cards,such as Visa or MasterCard,are recorded as:

The term cash equivalent

Dividend revenue and interest revenue are reported in the income statement as a component of a company's net income.

The term "financial asset" is synonymous with the term "cash equivalent."

Bank reconciliation--computation and journal entry The Cash account in the ledger of Arnaz Company showed a balance of $13,307 at March 31.The bank statement,however,showed a balance of $9,936 at the same date.The only reconciling items consisted of a $4,902 deposit in transit,a bank service charge of $36,outstanding checks totaling $2,600,and an NSF check from L.Ball,one of Arnaz' customers. (a)What is the amount of the adjusted cash balance on March 31? (b)What is the amount of the NSF check? (c)Record the journal entry necessary,if any,to adjust Arnaz Company's accounting records at March 31: (An explanation is not required; a single compound journal entry is acceptable.)

When interest is collected,it is debited to the Interest Revenue account and credited to the Notes Receivable account.

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

When the account Allowance for Doubtful Accounts is used,writing off of an uncollectible accounts receivable will:

Gains (or losses)on sales of marketable securities,as well as any unrealized holding gains (or losses)on investments in available for sale securities,are reported in the income statement.

All the following are steps included in the preparation of the bank reconciliation except:

When preparing a bank reconciliation,outstanding checks will:

Enclosed with the bank statement received by Sydney Company at October 31 was an NSF check for $300.No entry has yet been made by the company to reflect the bank's action in charging back the NSF check.During preparation of the bank reconciliation,the NSF check should be:

Marketable securities (a.)Explain how investments in available for sale marketable securities are valued in the investor's balance sheet.the objectivity principle? (c.)What does Unrealized Holding Gain (or Loss)on Investments represent? How is this item reported in the financial statements?

In handling of daily cash transactions,a few minor errors inevitably will occur.Which of the following is used to adjust the accounting records for these small errors?

Effective internal control includes all the following steps except:

A compensating balance is often required by a bank as a condition for granting a loan.

Deposits in transit would not appear on a company's bank reconciliation but would appear on the company's bank statement.

An NSF check returned by the bank should be entered in the depositor's accounting records by a debit to:

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?