Question 1

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 2

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 3

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

Accepted Answer

A) The accountant records all cash receipts and payments when reconciling the bank account at the end of each month. 
B) Management arranges for a loan to cover projected cash shortages during the production phase of the business cycle each year. 
C) Cash budgets (forecasts)are prepared only one month in advance in order to avoid the need for constant revision. 
D) All cash resources are held in the checking account to maximize liquidity. 
A) The accountant records all cash receipts and payments when reconciling the bank account at the end of each month. 
B) Management arranges for a loan to cover projected cash shortages during the production phase of the business cycle each year. 
C) Cash budgets (forecasts)are prepared only one month in advance in order to avoid the need for constant revision. 
D) All cash resources are held in the checking account to maximize liquidity.

Question 4

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

Accepted Answer

A) Cash sales. 
B) An account receivable from the cardholder. 
C) An account receivable from the bank. 
D) Credit card discount expense. 
A) Cash sales. 
B) An account receivable from the cardholder. 
C) An account receivable from the bank. 
D) Credit card discount expense.

Question 5

[The following information applies to the questions displayed below.]
The Cash account in the ledger of Hensley,Inc.showed a balance of $3,100 at June 30.The bank statement,however,showed a balance of $3,900 at the same date.The only reconciling items consisted of a $700 deposit in transit,a bank service charge of $7,and a large number of outstanding checks.
-What is the "adjusted cash balance" at June 30?

Accepted Answer

A) $3,900. 
B) $3,093. 
C) $7,600. 
D) $2,400. 
A) $3,900. 
B) $3,093. 
C) $7,600. 
D) $2,400.

Question 6

Internal control will aid in achieving accurate accounting for cash transactions.

Accepted Answer

A) True 
 B)False

Question 7

Salem's balance sheet at December 31,2017,includes which of the following as a result of the sale of land on November 1?

Accepted Answer

A) Notes Receivable of $900,000 and Interest Receivable of $9,000. 
B) Notes Receivable of $927,000 and Interest Receivable of $9,000. 
C) Notes Receivable of $900,000 and Interest Receivable of $27,000. 
D) Notes Receivable of $900,000 only. 
A) Notes Receivable of $900,000 and Interest Receivable of $9,000. 
B) Notes Receivable of $927,000 and Interest Receivable of $9,000. 
C) Notes Receivable of $900,000 and Interest Receivable of $27,000. 
D) Notes Receivable of $900,000 only.

Question 8

An Unrealized Holding Gain (or Loss)on Investments classified as "available-for-sale" securities:

Accepted Answer

A) Is reported in the asset section of the balance sheet,as an adjustment to the carrying value of the marketable securities. 
B) Is reported in the stockholders' equity section of the balance sheet,as either an increase or decrease in total stockholders' equity. 
C) Appears in the current period income statement,combined with realized gains and losses from sales of securities. 
D) Indicates the amount of cash a company would receive if the marketable securities were sold as of the balance sheet date. 
A) Is reported in the asset section of the balance sheet,as an adjustment to the carrying value of the marketable securities. 
B) Is reported in the stockholders' equity section of the balance sheet,as either an increase or decrease in total stockholders' equity. 
C) Appears in the current period income statement,combined with realized gains and losses from sales of securities. 
D) Indicates the amount of cash a company would receive if the marketable securities were sold as of the balance sheet date.

Question 9

The valuation principle of "fair value accounting" applied to investments classified as available-for-sale securities:

Accepted Answer

A) Affects the current period income statement,but not the balance sheet. 
B) Enhances usefulness of the balance sheet in evaluating the financial position of a business. 
C) Applies to marketable securities and inventories. 
D) Requires a corporation to adjust its capital stock account to reflect current market value of its outstanding capital stock. 
A) Affects the current period income statement,but not the balance sheet. 
B) Enhances usefulness of the balance sheet in evaluating the financial position of a business. 
C) Applies to marketable securities and inventories. 
D) Requires a corporation to adjust its capital stock account to reflect current market value of its outstanding capital stock.

Question 10

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.

Accepted Answer

(a)The term financial assets refers to c

Question 11

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 that 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. )Allowa

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

[The following information applies to the questions displayed below.]
At the end of March,the unadjusted trial balance of Tutor,Inc.included the following accounts:
  
-Tutor uses the income statement approach in estimating uncollectible accounts expense,and uncollectible accounts expense is estimated to be 3% of credit sales.The net realizable value of Tutor's accounts receivable in the March 31 balance sheet is:

Accepted Answer

A) $251,800. 
B) $253,500. 
C) $224,700. 
D) $255,300. 
A) $251,800. 
B) $253,500. 
C) $224,700. 
D) $255,300.

Question 14

The lower the accounts receivable turnover rate,the longer a company must wait to collect from its credit customers.

Accepted Answer

A) True 
 B)False

Question 15

The direct write-off method of recognizing uncollectible accounts expense:

Accepted Answer

A) Is acceptable only when most of the company's sales are on credit. 
B) Records uncollectible accounts expense when individual accounts receivable are determined to be worthless. 
C) Records uncollectible accounts expense when customers exceed their credit limits. 
D) Uses a valuation account to record specific customer accounts deemed uncollectible. 
A) Is acceptable only when most of the company's sales are on credit. 
B) Records uncollectible accounts expense when individual accounts receivable are determined to be worthless. 
C) Records uncollectible accounts expense when customers exceed their credit limits. 
D) Uses a valuation account to record specific customer accounts deemed uncollectible.

Question 16

Which of the following activities affects net income,but has no immediate impact upon cash flows?

Accepted Answer

A) Collection of an account receivable 
B) Making the end-of-period adjustment to record estimated uncollectible accounts 
C) Investing excess cash in marketable securities 
D) Write-off of an uncollectible account receivable against the allowance 
A) Collection of an account receivable 
B) Making the end-of-period adjustment to record estimated uncollectible accounts 
C) Investing excess cash in marketable securities 
D) Write-off of an uncollectible account receivable against the allowance

Question 17

A bank reconciliation explains the differences between:

Accepted Answer

A) Cash receipts and cash disbursements for the period. 
B) The balance of cash in the bank and the budgeted expenditures for the upcoming accounting period. 
C) The balance per bank statement and the cash balance per the accounting records of the depositor. 
D) The balance per bank statement and cash expected to be on hand according to the cash forecast. 
A) Cash receipts and cash disbursements for the period. 
B) The balance of cash in the bank and the budgeted expenditures for the upcoming accounting period. 
C) The balance per bank statement and the cash balance per the accounting records of the depositor. 
D) The balance per bank statement and cash expected to be on hand according to the cash forecast.

Question 18

At December 31,before adjusting and closing the accounts had occurred,the Allowance for Doubtful Accounts of Seaboard Corporation showed a debit balance of $3,200.An aging of the accounts receivable indicated the amount probably uncollectible to be $2,100.Under these circumstances,a year-end adjusting entry for uncollectible accounts expense would include a:

Accepted Answer

A) Debit to the Allowance for Doubtful Accounts for $1,100. 
B) Credit to the Allowance for Doubtful Accounts for $1,100. 
C) Debit to Uncollectible Accounts Expense of $2,100. 
D) Debit to Uncollectible Accounts Expense of $5,300. 
A) Debit to the Allowance for Doubtful Accounts for $1,100. 
B) Credit to the Allowance for Doubtful Accounts for $1,100. 
C) Debit to Uncollectible Accounts Expense of $2,100. 
D) Debit to Uncollectible Accounts Expense of $5,300.

Question 19

Assuming a 365-day year,Bush Industries calculated an average of 47 days to collect its accounts receivable in 2019.During 2018,Bush's accounts receivable turnover rate:

Accepted Answer

A) Was approximately 7.77. 
B) Was equal to 47 times its average accounts receivable. 
C) Was approximately 0.13. 
D) Can't be determined from this information alone. 
A) Was approximately 7.77. 
B) Was equal to 47 times its average accounts receivable. 
C) Was approximately 0.13. 
D) Can't be determined from this information alone.

Question 20

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.

Accepted Answer

(a)Factoring, (b)Allowance for doubtful

Exam 7: Financial Assets

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

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

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

Internal control will aid in achieving accurate accounting for cash transactions.

Salem's balance sheet at December 31,2017,includes which of the following as a result of the sale of land on November 1?

An Unrealized Holding Gain (or Loss)on Investments classified as "available-for-sale" securities:

The valuation principle of "fair value accounting" applied to investments classified as available-for-sale securities:

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.

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

The lower the accounts receivable turnover rate,the longer a company must wait to collect from its credit customers.

The direct write-off method of recognizing uncollectible accounts expense:

Which of the following activities affects net income,but has no immediate impact upon cash flows?

A bank reconciliation explains the differences between:

Assuming a 365-day year,Bush Industries calculated an average of 47 days to collect its accounts receivable in 2019.During 2018,Bush's accounts receivable turnover rate:

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

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

the Time Value of Money: Future Amounts and Present Values

Forms of Business Organization

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