Professional Documents
Culture Documents
Cash, Ar 2
Cash, Ar 2
Cash, Ar 2
d. Postdated checks
a. supplies.
c. investments.
d. none of these.
D. none of these
Which of the following items should not be included in the Cash caption on the balance
sheet?
All of the following may be included under the heading of "cash" except
a. currency.
a. Receivables.
b. Prepaid expenses.
c. Cash.
d. Payables.
A. Receivables
a. Cash.
b. Office supplies.
c. Receivables.
d. Inventory.
B. Office Supplies
arrangement.
Under which section of the balance sheet is "cash restricted for plant expansion"
reported?
a. Current assets.
b. Non-current assets.
c. Current liabilities.
d. Stockholders' equity.
B. Non-current assets
A cash equivalent is a short-term, highly liquid investment that is readily convertible into
b. has a current market value that is greater than its original cost
c. bears an interest rate that is at least equal to the prime rate of interest at the date of
liquidation.
d. is so near its maturity that it presents insignificant risk of changes in interest rates.
D. Is so near its maturity that it presents insignificant risk of changes in interest rates.
b. if legally restricted and held against short-term credit may be included as cash.
c. if legally restricted and held against long-term credit may be included among current
assets.
d. none of these.
D. none of these
d. none of these.
D. none of these
c. Dividends receivable
d. None of these
D. none of these
a. As offsets to capital.
d. As trade notes and accounts receivable if they otherwise qualify as current assets.
may be given a discount which is designed to induce prompt payment. Such a discount is
called a(n)
a. trade discount.
b. nominal discount.
c. enhancement discount.
d. cash discount.
A. trade discount
a. not recorded in the accounts; rather they are a means of computing a price.
If a company employs the gross method of recording accounts receivable from customers,
accounts receivable.
d. sales discounts forfeited in the cost of goods sold section of the income statement.
d. Both a. and c.
D. Both a. and c.
a. the same.
theoretically correct?
a. Net approach.
b. Gross approach.
c. Allowance approach.
A. Net approach
All of the following are problems associated with the valuation of accounts receivable
except for
a. uncollectible accounts.
b. returns.
d. allowances granted.
Why is the allowance method preferred over the direct write-off method of accounting for
bad debts?
Which of the following concepts relates to using the allowance method in accounting for
accounts receivable?
information.
c. Bad debt expense is an estimate that is based only on an analysis of the receivables
aging.
A. Bad debt expense is an estimate that is based on historical and prospective information.
How can accounting for bad debts be used for earnings management?
c. Using an aging of the accounts receivable balance to determine bad debt expense.
What is the normal journal entry for recording bad debt expense under the allowance
method?
allowance method?
Which of the following is included in the normal journal entry to record the collection of
accounts receivable previously written off when using the allowance method?
Assuming that the ideal measure of short-term receivables in the balance sheet is the
discounted value of the cash to be received in the future, failure to follow this practice
a. Charging bad debts with a percentage of sales under the allowance method.
b. Charging bad debts with an amount derived from a percentage of accounts receivable
c. Charging bad debts with an amount derived from aging accounts receivable under the
allowance method.
Which of the following methods of determining annual bad debt expense best achieves
a. Percentage of sales
d. Direct write-off
A. Percentage of sales
Which of the following is a generally accepted method of determining the amount of the
c. A percentage of accounts receivable not adjusted for the balance in the allowance
d. An amount derived from aging accounts receivable and not adjusted for the balance in
the allowance
B. A percentage of sales not adjusted for the balance in the allowance.unnecessary.
The advantage of relating a company's bad debt expense to its outstanding accounts
$1,000 trade note. The market rate for equivalent notes was 8% at that time. Gannon
reported this note as a $1,000 trade note receivable on its 2011 year-end statement of
financial position and $1,000 as sales revenue for 2011. What effect did this accounting
for the note have on Gannon's net earnings for 2011, 2012, 2013, and its retained
d. None of these
D. none of these
b. The transferor does not maintain effective control over the transferred assets through
c. The transferee has the right to pledge or exchange the transferred assets.
a. The obligation of the seller of the receivables to pay the purchaser in case the debtor
fails to pay.
b. The obligation of the purchaser of the receivables to pay the seller in case the debtor
fails to pay
c. The obligation of the seller of the receivables to pay the purchaser in case the debtor
A. The obligation of the seller of the receivables to pay the purchaser in case the debtor fails to pay.
Which of the following is true when accounts receivable are factored without recourse?
b. The receivables are used as collateral for a promissory note issued to the factor by the
c. The factor assumes the risk of collectibility and absorbs any credit losses in collecting
the receivables.
d. The financing cost (interest expense) should be recognized ratably over the collection
C. The factor assumes the risk of collectibility and absorbs any credit losses in collecting the receivables.
Which of the following statements is incorrect regarding the classification of accounts and
notes receivable?
c. Any discount or premium resulting from the determination of present value in notes
accounts.
C. Any discount or premium resulting from the determination of present value in notes receivable
transactions is an asset or liability respectively.
Of the following conditions, which is the only one that is not required if the transfer of
a. The transferor is obligated to make a genuine effort to identify those receivables that
are uncollectible.
b. The transferor surrenders control of the future economic benefits of the receivables.
estimated.
A. The transferor is obligated to make a genuine effort to identify those receivables that are
uncollectible.
a. number of times the average balance of accounts receivable is collected during the
period.
period.
d. number of times the average balance of inventory is sold during the period.
A. Number of times the average balance of accounts receivable is collected during the period.
balance sheet?
a. Notes receivable.
b. Interest receivable.
What is a possible reason for accounts receivable turnover to increase from one year to
Which of the following is an appropriate reconciling item to the balance per bank in a
bank reconciliation?
b. Deposit in transit.
c. Bank interest.
B. Deposit in transit
a. The imprest petty cash system in effect adheres to the rule of disbursement by check.
b. Entries are made to the Petty Cash account only to increase or decrease the size of