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CHAPTER 6
CASH AND ACCOUNTS RECEIVABLE
SUMMARY OF QUESTION TYPES BY LEARNING OBJECTIVE,
BLOOM’S TAXONOMY, LEVEL OF DIFFICULTY, AACSB CODES, AND
CPA CODES
Item LO BT LOD AACSB CPA Item LO BT LOD AACSB CPA Item LO BT LOD AACSB CPA
True-False Statements
1. 1 K E AN F 19. 5 K E AN F 37. 8 K M AN F
3. 2 K H AN F 21. 5 K E AN F 39. 8 K M AN F
4. 2 K E AN F 22. 5 K M AN F 40. 8 K M AN F
5. 2 K M AN F 23. 6 K E AN F 41. 8 K E AN F
7. 2 K H AN F 25. 6 AP E AN F 43. 8 K M AN F
8. 3 K E AN F 26. 6 K E AN F 44. 9 K E AN F
9. 3 K E AN F 27. 6 K M AN F 45. 9 C M AN F
12. 4 K M AN F 30. 7 K M AN F 48. 10 K E AN F
13. 4 K E AN F 31. 7 AP M AN F 49. 11 K M AN F
14. 4 K E AN F 32. 7 AP M AN F 50. 11 K M AN F
15. 4 K M AN F 33. 7 AP E AN F 51. 11 K M AN F
18. 5 K E AN F 36. 8 K H AN F 54. 11 K M AN F
Bloom’s: AP = Application C = Comprehension K = Knowledge

LOD: E = Easy M = Medium H = Hard
AACSB: AN = Analytic C = Communication E = Ethics
CPA: C = Communication F = Financial Reporting P = Professional & Ethical Behaviour
Copyright © 2015 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited
6-2 Test Bank for Understanding Financial Accounting, Second Canadian Edition
SUMMARY OF QUESTION TYPES BY LEARNING OBJECTIVE,

BLOOM’S TAXONOMY, LEVEL OF DIFFICULTY, AACSB CODES, AND
CPA CODES (CONT’D)
Item LO BT LOD AACSB CPA Item LO BT LOD AACSB CPA Item LO BT LOD AACSB CPA
Multiple Choice Questions
55. 1 K E AN F 76. 6 K M AN,C F 97. 8 C M AN,C F
56. 1 K E AN F 77. 6 K M AN F 98. 8 C M AN,C F
57. 2 K E AN F 78. 7 K M AN F 99. 9 K E AN F
59. 3 K M C C 80. 7 K H AN F 101. 9 K M AN F
60. 3 K M AN F 81. 7 K H AN F 102. 9 K E AN F
62. 3 K E AN F 83. 7 K M AN F 104. 10 K E AN F
63. 3 K M AN F 84. 7 K H AN F 105. 10 K M AN F
64. 4 K M AN F 85. 7 K H AN F 106. 10 K E AN F
65. 4 K M AN F 86. 7 K E AN,C F 107. 10 C M AN,C F
66. 4 AP M AN F 87. 8 K E AN F 108. 11 K E AN F
68. 4 C M AN,E F,P 89. 8 K H AN F 110. 11 K H AN F
69. 4 K H AN F 90. 8 K M AN F 111. 11 K M AN F
71. 4 K E AN F 92. 8 K H AN F 113. 11 K E AN F
72. 5 K E AN F 93. 8 K H AN F 114. 11 K E AN F
73. 5 K M AN F 94. 8 K E AN F 115. 11 K M AN F
74. 5 C M AN,C C,F 95. 8 K H AN F 116. 11 K M AN F
75. 6 K M AN F 96. 8 K H AN F 117. 11 C M AN,C F
Exercises
118. 4 K M AN F 122. 7,8 AP H AN F 126. 10,11 AN H AN F
119. 4 K H AN F 123. 7,8 K M AN F 127. 11 K H AN F
120. 4 K H AN F 124. 7,8 K M AN F
121. 7 K M AN F 125. 8 AP M AN F
Matching
3,6-
128. 9,11 K M AN F
Short-Answer Essay
129. 3 K M AN,C C,F 133. 6 C M AN,C C,F 137. 10 C M AN,C C,F
130. 3 K E AN F 134. 7,9 K M AN,C F 138. 11 K M AN F
131. 4 K M AN F 135. 8 K M AN F
132. 5 K M AN F 136. 9 C M AN,C F
Essay
139. 4 K H AN F
Bloom’s: AP = Application C = Comprehension K = Knowledge

LOD: E = Easy M = Medium H = Hard
AACSB: AN = Analytic C = Communication E = Ethics
CPA: C = Communication F = Financial Reporting P = Professional & Ethical Behaviour
Cash and Accounts Receivable 6-3
SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE
Item Type Item Type Item Type Item Type Item Type Item Type Item Type
Learning Objective 1
1. TF 2. TF 55. MC 56. MC
3. TF 4. TF 5. TF 6. TF 7. TF 57. MC
8. TF 10. TF 58. MC 60. MC 62. MC 128. Ma 130. SAE
9. TF 11. TF 59. MC 61. MC 63. Mc 129. SAE
12. TF 15. TF 64. MC 67. MC 70. MC 119. Ex 139. Es
13. TF 16. TF 65. MC 68. MC 71. MC 120. Ex
14. TF 17. TF 66. MC 69. MC 118. Ex 131. SAE
18. TF 20. TF 22. TF 73. MC 132. SAE
19. TF 21. TF 72. MC 74. MC
23. TF 25. TF 27. TF 29. TF 76. MC 128. Ma
24. TF 26. TF 28. TF 75. MC 77. MC 133. SAE
30. TF 33. TF 78. MC 81. MC 84. MC 121. Ex 124. Ex
31. TF 34. TF 79. MC 82. MC 85. MC 122. Ex 128. Ma
32. TF 35. TF 80. MC 83. MC 86. MC 123. Ex 134. SAE
36. TF 40. TF 87. MC 89. MC 93. MC 97. MC 124. Ex
37. TF 41. TF 86. MC 90. MC 94. MC 98. MC 125. Ex
38. TF 42. TF 87. MC 91. MC 95. MC 122. Ex 128. Ma
44. TF 46. TF 100. MC 102. MC 134. SAE
45. TF 99. MC 101. MC 128. Ma 136. SAE
47. TF 103. MC 105. MC 107. MC 137. SAE
48. TF 104. MC 106. MC 126. Ex
49. TF 52. TF 108. MC 111. MC 114. MC 117. MC 128. Ma
51. TF 54. TF 110. MC 113. MC 116. MC 127. Ex
Note: TF = True-False Ex = Exercise SAE = Short-Answer Essay

MC = Multiple Choice Ma = Matching Es = Essay
CHAPTER LEARNING OBJECTIVES
1. Explain why cash and accounts receivable are of significance to users.

As a company’s most liquid assets, cash and accounts receivable provide the resources
necessary to meet immediate, short-term financial obligations.
Knowing a company’s cash and receivables balances enables users to assess a company’s
liquidity (its ability to meet its obligations in the short term).
2. Describe the valuation methods for cash.

Cash includes the cash physically on hand, on deposit at financial institutions, and any cash
equivalents.
Cash equivalents are amounts that can be converted into known amounts of cash and must be
maturing within three months of the acquisition date.
Cash is measured at its face value at the reporting date, with any foreign currency translated
into Canadian dollars using the rate of exchange at the statement of financial position date.
3. Explain the main principles of internal control and their limitations.

The board of directors are ultimately responsible for an organization’s internal controls. The
board establishes the “tone at the top” regarding the importance of internal controls.
Management are delegated the responsibility for establishing and operating the internal control
system and their performance is monitored by the board.
An internal control system includes (1) physical controls (locks, alarms, cash registers); (2)
assignment of responsibilities (making one person responsible for each task); (3) separation of
duties (separation of transaction authorization, recording, and asset custody); (4) independent
verification (either internal or external); and (5) documentation (receipts, invoices, and so on).
The effectiveness of internal controls is limited by factors including: (1) cost/benefit
considerations; (2) human error; (3) collusion; (4) management override; and (5) changing
circumstances.
4. Explain the purpose of bank reconciliations, including their preparation and the
treatment of related adjustments.
A bank reconciliation ensures that any differences between the accounting records for cash and
the bank statement are identified and explained.
The reconciliation adjusts the bank balance for items that the company is aware of but the bank
is not (outstanding cheques and outstanding deposits). It also adjusts the company’s cash
balance for items that appear on the bank statement that have not yet been reflected in the
company’s records (such as bank charges, interest, and cheque returns due to non-sufficient
funds).
Journal entries must be made for each adjustment required to the company’s cash balance in
order to adjust the cash balance in the general ledger.
5. Explain why companies sell on account and identify the additional costs that result
from this decision.
Companies sell on account to increase total sales, remain competitive, and generate additional
revenue (interest).
When selling on account, companies incur additional costs, including wages for the credit-
granting function, wages for the collections function, and bad debts expense.
6. Describe the valuation methods for accounts receivable.

Accounts receivable are reflected on the statement of financial position at their carrying amount,
which is equal to the full amount of all receivables less the allowance for doubtful accounts.
The allowance for doubtful accounts represents management’s best estimate of the total
accounts receivable that it expects it will be unable to collect.
7. Explain the allowance method of accounting for bad debts.

The allowance method involves management estimating the amount of receivables that they
expect they will be unable to collect. The estimated bad debts expense is recorded in the same
period in which the credit sales were reported rather than waiting to record the bad debt until the
customers fail to pay.
Since the specific customers who will not pay are unknown at the time the bad debts expense is
estimated, no adjustment can be made to the Accounts Receivable account. Instead, the
amount is recorded in Allowance for Doubtful Accounts, a contra-asset account.
Under the allowance method, journal entries are required to initially record the bad debts
expense, to record the writeoff of specific receivables once they are known, and to record the
recovery of any receivables that have previously been written off.
8. Identify the two methods of estimating bad debts under the allowance method and
describe the circumstances for using each method.
The two methods of estimating bad debts under the allowance method are: the percentage of
credit sales method and the aging of accounts receivable method.
With the percentage of credit sales, the estimated bad debts expense is determined using a
percentage (historic or industry average) of credit sales revenue. No analysis of the allowance
for doubtful accounts is required to determine bad debts expense.
With the aging of accounts receivable method, an estimate of uncollectible accounts is made
using a percentage (historic or industry average), with bad debts expense equal to the amount
required to adjust the Allowance for Doubtful Accounts balance to this estimated total. An
analysis of allowance for doubtful accounts is required to determine bad debts expense.
9. Explain the direct writeoff method of accounting for bad debts and when it is
acceptable to use it.
Under the direct writeoff method, there is no accounting for bad debts expense until a specific
customer’s account is written off. As such, allowance for doubtful accounts is not needed.
This method is not acceptable under accounting standards in Canada, but it is sometimes used
by companies with an insignificant amount of bad debts because the difference between it and
the allowance method would not result in material differences.
10. Explain alternative ways in which companies shorten their cash-to-cash cycle.
One way that companies shorten their cash-to-cash cycle is to accept credit cards rather than
offering their customers credit directly. The company is able to collect much more quickly from
the credit card companies than it would from customers.
Another way that companies shorten the cash-to-cash cycle is to offer sales discounts to
encourage customers who have purchased on account to pay their accounts early. A common
sales discount is “2/10; n/30,” which entitles the customer to a 2% discount if they pay they
account within 10 days; otherwise, the net amount is due within 30 days.
Some companies also factor (sell) their accounts receivables to a financial institution (known as
a factor) in order to shorten their cash-to-cash cycle. The receivables may be sold with recourse
(the company remains responsible for their ultimate collection) or without recourse (the factor
assumes collection responsibility).
11. Explain the concept of liquidity. Calculate the current ratio, quick ratio, accounts
receivable turnover ratio, and average collection period ratio and assess the results.
Liquidity is a company’s ability to convert assets into cash so that liabilities can be paid.
The current ratio is equal to current assets divided by current liabilities and is a measure of the
amount of current assets the company has relative to each dollar of current liabilities.
The quick ratio is a stricter measure of liquidity than the current ratio. This is because it is
determined without including inventory and prepaid expenses. Specifically, the ratio is equal to
current assets less inventory and prepaids divided by current liabilities.
The accounts receivable turnover ratio is equal to credit sales divided by average accounts
receivable. It measures how often accounts receivable are collected in full during the period.
The average collection period is the average length of time, in days, that it takes a company to
collect its receivables. It is calculated by dividing 365 by the accounts receivable turnover ratio.
TRUE-FALSE STATEMENTS
1. The definition of cash only includes currency and bank accounts.
2. Cash and accounts receivable are a company’s least liquid assets.
3. Foreign currency is valued and reported on the statement of financial position using the
exchange rate that existed on the transaction date.
4. Cash equivalents have a maturity date within three months of the date of acquisition.
5. A treasury bill is an example of a long-term investment.
6. Companies will never have a negative cash balance as cash is an asset and must always be
in a debit position.
7. Cash held in foreign currencies must be translated into Canadian dollars using the rate of
exchange at the statement of financial position date.
8. Writing cheques instead of using cash would be a proper internal control procedure.
9. For internal control purposes, if duties are effectively separated, there is no way fraud can
occur.
10. Collusion is where two or more employees work together to commit the theft and conceal it.
11. Independent verification can be done internally or externally.
12. When preparing a bank reconciliation, the balance as reported by the bank is adjusted until
it agrees with the balance reported in the company’s books.
13. Bank reconciliations should only be prepared for a company’s main operating account.
14. A bank reconciliation has two sides, one is the” bank side” and the other is the “balancing
side”.
15. The reconciling items on the bank side will be items the company knows about but the bank
does not.
16. To adjust the cash account to the correct amount, the accountant needs to make journal
entries for all the adjustments on the G/L side of the bank reconciliation.
17. All adjustments that are additions to the G/L side of a bank reconciliation are credits to cash.
18. An accounts receivable is usually evidenced by a formal promissory note.
19. Selling on account reduces overall sales.
20. The likelihood a customer will default on payments depends on the customer’s
creditworthiness.
21. A company with strict credit policies may lose potential sales.
22. A company with too loose credit policies will benefit from a substantial increase in sales with
no impact to expenses.
23. The gross amount of accounts receivable should be reflected on the statement of financial
position; this is what the company expects to collect in cash.
24. Accounts receivable are reflected on the statement of financial position at their gross
amounts.
25. Allowance for doubtful accounts is a contra-liability account.
26. When companies are using the allowance for doubtful accounts, they are using the
allowance method.
27. The A/R subledger is used to manage the individual account details of each of the
company’s suppliers.
28. The total of all the A/R subledgers must equal the total of the Accounts Receivable account.
29. Companies following IFRS must disclose changes in the Allowance for Doubtful Accounts
balance in the notes to the financial statements.
30. The allowance method of recognizing bad debt expense does not properly match revenues
and expenses.
31. Under the allowance method, a company must record the bad debt expense in the same
period in which the credit sales were recorded.
32. A writeoff is the process of reinstating a customer’s account when it is deemed collectible.
33. When a customer makes full or partial payment of an account that has previously been
written off, this is considered a recovery.
34. A recovery of an account will decrease the Cash account and increase the Accounts
Receivable account.
35. Bad Debt Expense is a permanent account.
36. If bad debt expense is over or underestimated in a prior period, an adjustment will be made
to the allowance for doubtful accounts this period.
37. The percentage of credit sales method for estimating bad debt expense is based on the
assumption that the amount of bad debts is a function of the total sales made on credit.
38. Percentage of sales method is also known as the statement of financial position method.
39. When estimating bad debts under the allowance method, companies can only use one
method.
40. New business cannot account for bad debts because they do not have any historical data
in relation to collectible accounts.
41. The longer a receivable goes without being collected, the less likely it will become
uncollectible.
42. As a contra-asset account, Allowance for Doubtful Accounts will always have a credit
balance.
6 - 10 Test Bank for Understanding Financial Accounting, Second Canadian Edition
43. Aging of accounts receivable method will normally result in a better approximation of the net
realizable value of the receivables than the percentage of credit sales method.
44. The direct writeoff method recognizes bad debts only when they know the customer is not
going to pay.
45. The direct writeoff method requires two journal entries when an account is written off.
46. The appropriate method to use when bad debts are significant is the allowance method.
47. Selling to customers on account reduces the cash-to-cash cycle.
48. To shorten the cash-to-cash cycle companies will offer a sales discount for early payment.
49. The current ratio is most commonly used to measure the stability of an entity.
50. Analyzing the accounts receivable turnover is important in assessing the short-term liquidity
of an organization.
51. The quick ratio is a less stringent measure of liquidity than the current ratio.
52. Two common ratios for long-term liquidity are the current ratio and the quick ratio.
53. One problem with the current ratio is that some assets may be less liquid than others.
54. A higher accounts receivable turnover ratio number is better than a lower accounts
receivable turnover number.
Cash and Accounts Receivable 6 - 11
ANSWERS TO TRUE-FALSE STATEMENTS

Item Ans. Item Ans. Item Ans. Item Ans.
1. F 15. T 29. T 43. T
2. F 16. T 30. F 44. T
3. F 17. F 31. T 45. F
4. T 18. F 32. F 46. T
5. F 19. F 33. T 47. F
6. F 20. T 34. F 48. T
7. T 21. T 35. F 49. F
8. T 22. F 36. T 50. T
9. F 23. F 37. T 51. F
10. T 24. F 38. F 52. F
11. T 25. F 39. F 53. T
12. F 26. T 40. F 54. T
13. F 27. F 41. F
14. F 28. T 42. F
MULTIPLE CHOICE QUESTIONS
55. All of the following are normally considered liquid assets of a company except
a) accounts receivable.
b) inventory.
c) notes receivable.
d) short-term investments.
56. Which of the following would be classified as part of the cash account on the statement of
financial position?
a) short-term investments
b) prepaid expenses
c) currency
d) restricted cash
57. Foreign currency held by a Canadian corporation is disclosed on the financial statements
using the exchange rate that existed on the date of the
a) financial statements.
b) purchase of the currency.
c) change in the exchange rate.
d) intended use of the currency.
58. All of the following are examples of internal controls over cash except
a) depositing cash in the bank regularly.
b) ensuring different people are responsible for receiving and depositing cash.
c) ensuring that all cash transactions are recorded on a regular basis.
d) maintaining a separate facility for the storage of perishable inventory.
59. The effectiveness of internal control is limited by

a) fraud.
b) cash on hand.
c) collusion.
d) all of the above
e) none of the above
60. Opportunities for employee fraud arise when

a) an employee is in charge of purchasing, inspecting, and recording assets.
b) employees verify each other’s work.
c) an employee has clear documentation procedures.
d) an employee is responsible for making the daily cash bank deposit.
61. Policies and procedures that are established to protect and manage a company’s assets are
known as
a) a record-keeping system.
b) an accounting system.
c) internal controls.
d) management controls.
62. All of the following are examples of physical controls except

a) locks.
b) fences.
c) bank reconciliations.
d) alarms.
63. Separation of duties means

a) one person receives cash and one person signs cheques.
b) one person signs cheques and orders goods.
c) one person enters transactions and signs cheques.
d) one person receives cash and reconciles the bank.
64. Which of the following is not a reconciling item when preparing a bank reconciliation?
a) bank service charges not recorded by the corporation
b) outstanding cheques
c) interest collected on a note receivable by the bank and recorded by the corporation
d) outstanding deposits
65. The ending balance on the bank statement for June is $1,425.33. The company has
outstanding cheques of $263.35, outstanding deposits of $729.61, and incurred bank service
fees of $12.00 during the month. The adjusted cash balance for the company as at June 30 is
a) $947.07.
b) $1,891.59.
c) $1,879.59.
d) $1903.59.
66. Who should be responsible for preparing the bank reconciliation?

a) the person who makes the deposits
b) the person who writes the cheques
c) the person who maintains the accounting records
d) a person not involved in the day-to-day banking activities
67. As part of the bank reconciliation process, the following must occur:
a) bank adjusting entries.
b) company adjusting entries.
c) verification of bank charges.
d) inventory of company cheques.
68. A key control used to mitigate the unethical manipulation of accounting records and
fraudulent cash transactions is

a) bank reconciliation.
b) separation of duties.
c) physical controls.
d) documentation.
69. Bank reconciliations are not

a) an important cash control.
b) to be completed by all companies.
c) sufficient to determine fraud.
d) useful.
70. All of the following are reasons why a transaction may have been reflected in the company’s
accounting records but not by the bank, except
a) a cheque has been written but the receiving company did not deposit it yet.
b) bank has charged service fees.
c) the company made a deposit on the last day of the month.
d) the company recorded a payment received however forgot to deposit the cheque.
71. The starting point for the bank portion of the bank reconciliation is labelled
a) Account Balance.
b) Bank Balance.
c) Transaction Balance.
d) Cash Balance.
72. Which of the following statements is incorrect?

a) Companies sell on account to increase total sales.
b) Companies sell on account to remain competitive.
c) Companies sell on account to generate additional forms of revenue.
d) Companies sell on account to increase bad debt expense.
73. When selling on account, companies incur costs such as

a) wages for credit-granting function.
b) rent expense.
c) bad debt revenue.
d) sales discounts.
74. A company can mitigate bad debt expense by

a) extending payments terms.
b) not charging interest on late payments.
c) performing credit checks.
d) all of the above
e) none of the above
75. Which of the following do not affect the amounts collected on accounts receivables?
a) credit policy
b) returns policy
c) discounts policy
d) the allowance for doubtful accounts
76. The individual account details for each of a company’s customers is managed in the
a) Control account.
b) Allowance for Doubtful Accounts.
c) Bad Debts Expense.
d) subledger.
77. Accounts Receivable are reflected on the statement of financial position at the carrying
amount which is
a) Accounts Receivable plus Allowance for Doubtful Accounts.
b) Accounts Receivable less Allowance for Doubtful Accounts.
c) Accounts Receivable plus Bad Debt Expense.
d) Accounts Receivable less Bad Debt Expense.
78. Which of the following entries would be the appropriate entry for writing off an uncollectible
account receivable under the allowance method?
a) Dr. Bad Debt Expense
Cr. Accounts Receivable
b) Dr. Sales
c) Dr. Accounts Receivable
Cr. Bad Debt Expense
d) Dr. Allowance for Doubtful Accounts
79. Which of the following is a contra account?

a) Bad Debts
b) Accounts Receivable Recoveries
c) Allowance for Doubtful Accounts
d) Credit Sales
80. When an account receivable that has previously been written off is later paid, under the
allowance method the correct accounting is to
a) Dr. A/R
Cr. Allowance for Doubtful Accounts
Dr. Cash
Cr. A/R
b) Dr. A/R
Cr. Cash
Dr. A/R
c) Dr. Cash
Cr. A/R
d) Dr. A/R
81. Aurora Co. had Accounts Receivable totalling $450,000 and an Allowance for Doubtful
Accounts with a balance of $5,000 on December 1, 2020. On December 2 Aurora wrote off
$7,500 of uncollectible accounts. The net carrying value of Accounts Receivable before and
after the writeoff was
Before After
a) $450,000 $442,500.
b) $445,000 $445,000.
c) $445,000 $452,500.
d) $445,000 $457,500.
82. The process of removing a specific customer’s account receivable from a company’s books
when the account is deemed uncollectible is
a) an allowance.
b) a writeoff.
c) a recovery.
d) none of the above
83. The contra-asset account used to provide for an estimate of uncollectible accounts is
a) Bad Debt Expense.
b) Allowable Accounts Receivable.
c) Allowance for Doubtful Accounts.
d) A/R subledger.
84. The entry to provide for uncollectible accounts under the allowance method affects both the
statement of income and the statement of financial position by
a) increasing expenses and increasing the carrying amount of the accounts receivable.
b) decreasing expenses and increasing the carrying amount of the accounts receivable.
c) increasing expenses and decreasing the carrying amount of the accounts receivable.
d) decreasing expenses and decreasing the carrying amount of the accounts receivable.
85. Which of the following statements is correct in regards to the recovery entry of a specific
accounts receivable?
a) It does not affect the statement of financial position.
b) It affects both the statement of income and the statement of financial position.
c) It only affects the statement of income.
d) It only affects the statement of financial position.
86. The Allowance for Doubtful Accounts

a) is easier to use than the direct writeoff method.
b) is a control account.
c) is part of ensuring faithful representation.

d) captures all of the A/R that will never be collected.
Use the following information for questions 87–88.
Bailey Inc.'s books revealed the following data for 2020 after all adjustments were made:
Cash sales $825,000
Sales returns (on credit sales) 35,000
Allowance for doubtful accounts (credit balance) 3,800
Credit sales 575,000
Accounts receivable 168,000
Bailey estimates bad debt expense based on 2% of net credit sales.
87. The bad debt expense for 2020 was

a) $10,800.
b) $11,500.
c) $14,600.
d) $3,360.
88. The net carrying value of accounts receivable before the bad debt expense is recognized is
a) $156,500.
b) $164,200.
c) $168,000.
d) $171,800.
Melrose Company recorded $3,500,000 in credit sales in 2020 and prepared the following aging
schedule of their $730,000 in Accounts Receivable as at December 31, 2020:
Days outstanding Balance Estimated percentage uncollectible
0–30 days $350,000 1%
31–60 days 275,000 2%
61–90 days 67,500 5%
0ver 90 days 37,500 25%
The balance in their Allowance for Doubtful Accounts before year-end adjustments is a $2,000
credit.
89. The bad debt expense for 2020 is

a) $21,750.
b) $23,750.
c) $19,750.
d) $35,000.
90. The balance in the Allowance for Doubtful Accounts after year-end adjustments will be
a) $2,000.
b) $23,750.
c) $21,750.
d) $19,750.
91. The statement of financial position method is also known as

a) the percentage of credit sales method.
b) the easy collection method.
c) the aging of accounts receivable method.
d) none of the above
92. Which one of the following calculations is correct for the percentage of credit sales method?
a) Bad Debt Expense = Sales x historical %
b) Bad Debt Expense = Credit Sales x historical %
c) Bad Debt Expense x historical % = Allowance for Doubtful Accounts
d) Bad Debt Expense = Accounts Receivable x historical %
93. If a company is experiencing more writeoffs than were estimated,

a) the bad debt should be reduced next period.
b) the direct method should be implemented.
c) the percentage of bad debts should be increased next accounting period.
d) an adjustment should be made retrospectively.
94. The most common threshold for account receivable groupings is

a) 0–5 days.
b) n/120 days.
c) 30–60 days.
d) 160–180 days.
95. All of the following are features of the percentage of credit sales method except
a) emphasizes earnings statement relationships.
b) focuses on asset valuation.
c) determines bad debts expense directly.
d) focuses on income measurement.
96. All of the following are features of the aging of accounts receivable method except
a) focuses on asset valuation.
b) analysis of allowance for doubtful accounts required in order to determine bad debts
expense.
c) emphasizes statement of financial position relationship.
d) determines bad debt expense directly.
97. When the bad debt estimate is based on the assumption that the amount of bad debt is a
function of the total sales made on credit, this method is known as
a) the direct writeoff method.
b) the percentage receivables method.

c) the percentage of credit sales method.
d) aging of accounts receivable method.
98. When a company has an immaterial amount of bad debts, it may choose to account for bad
debt expense using
a) the direct writeoff method.
b) the percentage receivables method.
c) the percentage of credit sales method.
99. Which of the following methods does not accurately match revenues to expenses in the
same period?
a) direct writeoff method
b) allowance method
c) percentage of credit sales method
d) aging of accounts receivable method
100. When is it acceptable to use the direct writeoff method to account for uncollectible
accounts?
a) when the expected bad debts are significant
b) when the company has historical data in regards to uncollectible accounts
c) when the company uses the percentage of sales method
d) when the expected bad debts are not significant
101. No allowance for doubtful accounts is used for the

a) direct writeoff method.
b) percentage of credit sales method.
c) allowance method.
102. If bad debts are not significant, which method is best to use?
a) direct writeoff method
b) percentage of credit sales method
c) allowance method
d) aging of accounts receivable method
103. If a company is experiencing cash flow difficulties, it may opt to sell its receivables to a
third party to generate cash. This is known as
a) internal cash controls.
b) pledging.
c) factoring.
d) cash management.
104. Many companies have to pay a fee for credit card transactions; this fees is normally
a) 0–1%.
b) 5–10%.
c 10–30%.
d) 1–4%.
105. If a company recorded a $5,500 credit card transaction and the credit card discount was
4%, what is the correct entry to accounts receivable?
a) Dr. Accounts Receivable $5,720
b) Dr. Accounts Receivable $5,280
c) Cr. Accounts Receivable $5,720
d) Cr. Accounts Receivable $5,280
106. If a company is looking to shorten their cash-to-cash cycle, they can sell their accounts
receivable and this is called
a) recourse.
b) factoring.
c) writeoff.
d recovery.
107. Strategies a company may engage in to improve its cash-to-cash cycle include
a) reducing the days accounts payable.
b) reducing the accounts receivable turnover.
c) offering early payment discounts.
d) all of the above
Eugene Enterprise Ltd. revealed the following information for the years ended December 31,
2019 and 2020:
2020 2019
Current Assets
Cash $ 25,000 $ 26,250
Accounts Receivable 247,500 299,000
Inventory 1,950,000 1,725,000
Prepaid expenses 4,000 4,000
Total Current Assets $2,226,500 $2,054,250
Current Liabilities $1,400,000 $1,225,000
Net Credit Sales $2,400,000 $2,255,000
Orville Enterprise’s credit terms are net 30 days.
108. Eugene Enterprise Ltd’s 2020 current ratio is

a) 1.59:1.
b) 1.39:1.
c) 1.00:1.
d) 0.19:1.
109. Eugene Enterprise’s quick ratio for 2020 is

a) 1.59:1.
b) 1.39:1.
c) 0.88:1.
d) 0.19:1.
110. Eugene Enterprise’s A/R turnover ratio is

a) 9.70.
b) 8.78.
c) 8.03.
d) 8.52.
111. On average Eugene Enterprise has been collecting its accounts receivable
a) within the 30 days required by its credit terms.
b) after the 30 days has passed.
c) within the discount period of 10 days.
d) More information is needed to answer this question.
112. The current ratio is also known as

a) working capital ratio.
b) debt to equity ratio.
c) current turnover.
d) quick ratio.
113. A current ratio of 3:1 means

a) the company has 3 dollars of current debt to every dollar of current assets.
b) the company has 3 dollars of current assets to every 1 dollar of current debt.
c) the company has 3 dollars of current assets for every 3 dollars of current debt.
d) the company has 3 dollars of current debt to every 3 dollar of current assets.
114. The quick ratio is also known as

b) debt to equity ratio.
c) current turnover.
d) acid test ratio.
115. Which of the following statements is incorrect?

a) If the current ratio is too high the company may not be managing its assets effectively.
b) If the current ratio is too high the company may have overly high levels of inventory.
c) If the current ratio is too high the company may have too much cash on hand.
d) If the current ratio is too high the company may have an insignificant amount of receivables.
116. Quick assets are

a) inventory plus cash and prepaid expenses.
b) current assets plus current liabilities.
c) current assets less prepaid expenses.
d) current assets less inventory and prepaid expenses.
117. A company’s effectiveness regarding its collection efforts can be measured by using the
b) acid test ratio.
c) accounts payable turnover.
d) accounts receivable turnover.
ANSWERS TO MULTIPLE CHOICE QUESTIONS

Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans.
55. b 66. d 77. b 88. b 99. a 110. b
56. c 67. b 78. d 89. c 100. d 111. b
57. a 68. a 79. c 90. c 101. a 112. a
58. d 69. c 80. a 91. c 102. a 113. b
59. c 70. b 81. b 92. b 103. c 114. d
60. a 71. b 82. b 93. c 104. d 115. d
61. c 72. d 83. c 94. c 105. b 116. d
62. c 73. a 84. c 95. b 106. b 117. d
63. a 74. c 85. d 96. d 107. c
64. c 75. d 86. c 97. c 108. a
65. b 76. d 87. a 98. a 109. d
EXERCISES
118. The Oct 31 bank statement for Malone Ltd had an ending balance of $4,250.12. The cash
account according to the company’s records was $3,433.52 as at the same date. The following
additional data was available
1. The company had made a deposit in the night box of $1,200.00 on Oct 31 after the branch
was closed.
2. There were outstanding cheques totalling $2,718.60 as at Oct 31.
3. The bank service fee was $40.00 for the month.
4. A cheque in the amount of $650.00 deposited by Malone on May 21 had been returned
NSF and the bank charged a $12.00 fee on the item. Malone had not known about the
returned item until it received the bank statement.
Instructions
Prepare the bank reconciliation for Malone Ltd. for the month of Oct.
Solution (10 min.)

Malone Ltd. Bank Reconciliation as at Oct 31
Bank Balance $4,250.12 G/L Balance $3,433.52

Add:
Outstanding deposit 1,200.00
Deduct: Deduct:
Outstanding cheques (2,718.60) Bank service fees ($40 + $12) (52.00)
Returned cheque (650.00)
Reconciled Balance $2,731.52 Reconciled Balance $2,731.52
119. The cash records of Montrose Corporation show the following:

1. The March 31 bank reconciliation indicated that deposits in transit totalled $400. During
April, the general ledger account, Cash, shows deposits of $10,700, but the bank statement
indicates that only $8,540 in deposits were received during the month.
2. The March 31 bank reconciliation also reported outstanding cheques of $2,100. During the
month of April, Montrose Corporation’s books show that $11,170 of cheques were issued,
yet the bank statement showed that $11,500 of cheques cleared the bank in April.
There were no bank debit or credit memoranda and no errors were made by either the bank or
Montrose Co.
Instructions
a) What were the deposits in transit at April 30?
b) What were the outstanding cheques at April 30?
Solution
a) Deposits in transit:
Deposits per books in April ................................ $10,700
Deposits per the bank in April............................ $8,540
Less: March 31 deposits in transit ..................... 400

March receipts deposited in April ...................... 8,140
Deposits in transit, April 30 ................................ $ 2,560
b) Outstanding cheques:
Cheques per books in April ............................... $11,170
Cheques clearing the bank in April .................... $11,500
Less: Outstanding cheques, March 31 .............. 2,100
March cheques clearing in April ........................ 9,400
Outstanding cheques, April 30 .......................... $ 1,770
120. Nizzero Corporation is a newly created company and noted the following cash related
transaction for the first month ended April 2020:
1. According to the bank statement received for the month of April 2020, the balance in
Nizzero’s bank account on April 30 was $11,356.69.
2. The balance in the company’s Cash account in the general ledger on April 30, 2020 was
$13,211.76.
3. The last deposit of the month, for $867.91, was made as a night deposit on April 30.
4. One of Nizzero’s customers paid its account by making an EFT from its bank into Nizzero’s
bank account in the amount of $616.09.
5. The bank subtracted a service charge of $42.00 from the company’s bank account for April.
6. Cheque number 001 for $603.44, cheque number 009 for $531.00, and cheque number
010 for $78.49 were still outstanding at the end of April.
7. The bank statement showed that $750.00 was deducted from Nizzero’s account by the
bank as payment of loan principal.
8. The bank returned a cheque from one of Nizzero’s customers marked NSF for $206.80 that
a customer used to pay off their account.
9. The bank statement showed that cheque number 004 (which Nizzero had issued to pay for
utilities expense) was recorded by the bank as $784.65, while the company incorrectly
recorded this cheque as $874.65.
10. The bank deducted a cheque written by Nizarri Company (a different company) from
Nizzero Company’s account. The amount of the cheque was $1,907.38.
Instructions
a) Prepare the bank reconciliation for April 30, 2020.
b) Prepare all necessary journal entries to balance the cash ledger.
Solution
a)
Nizerro Corporation Bank Reconciliation as at April 30, 2020
Bank Balance $11,356.69 G/L Balance $13,211.76

Add: Add:
Outstanding deposit 867.91 EFT receipts $616.09
Correction of error made Correction of error made
by bank $1,907.38 by company $90.00
Deduct: Deduct:
Outstanding cheques: Bank charges (42.00)

#001 ($603.44) Automatic deduction
#009 ($531.00) for loan payment ($750.00)
#010 ($78.49) NSF cheque (206.80)
Reconciled Balance $12,919.05 Reconciled Balance $12,919.05
b) Cash ................................................................. $616.09

Accounts Receivable .................................. $616.09
Cash ................................................................. $90.00

Utilities Expense ......................................... $90.00
Bank charges expense ...................................... $42.00

Cash........................................................... $42.00
Bank loan payable............................................. $750.00

Cash........................................................... $750.00
Accounts Receivable ......................................... $206.80

Cash........................................................... $206.80
121. Bering Computers has credit sales of $600,000 in 2020 and a debit balance of $1,600 in
the Allowance for Doubtful Accounts at year end. As of December 31, 2020, $105,000 of
accounts receivable remain uncollected. The credit manager of Bering prepared an aging
schedule of accounts receivable and estimates that $5,600 will prove to be uncollectible.
On April 15, 2021 Bering Computers writes off the $1,500 balance owed by A. Justice.
Instructions
a) Prepare the adjusting entry to record the estimated uncollectible accounts expense in 2020.
b) Show the statement of financial position presentation of accounts receivable on December
31, 2020.
c) On April 15, before the writeoff, assume the balance of Accounts Receivable account is
$123,000 and the balance of Allowance for Doubtful Accounts is a credit of $3,000. Make
the appropriate entry to record the writeoff of the Justice account. What it is the net
realizable value of the accounts receivable before and after the writeoff?
Solution
a) Bad Debts Expense ($5,600 + $1,600).............. 7,200
Allowance for Doubtful Accounts ................ 7,200
b) Accounts Receivable ......................................... $105,000

Less: Allowance for Doubtful Accounts ............. 5,600 $99,400
c) Allowance for Doubtful Accounts ....................... 1,500

Accounts Receivable—A. Justice ............... 1,500
Before Writeoff After Writeoff

Accounts Receivable................................................ $123,000 $121,500
Less: Allowance for Doubtful Accounts .................... 3,000 1,500
Net Realizable Value................................................ $120,000 $120,000
122. The December 31, 2020 statement of financial position for Debrose Limited had Accounts
Receivable of $450,000 and a credit balance in Allowance for Doubtful Accounts of $45,000.
During 2021 the following transactions occurred: service revenue billed on account, $1,500,000;
collections from customers, $1,300,000; accounts written off $37,000; previously written off
accounts of $4,000 were collected.
Instructions
a) Record the 2021 transactions.
b) If the company uses the percentage of receivables basis to estimate bad debts expense
and determines that uncollectible accounts are expected to be 5% of accounts receivable,
what is the adjusting entry at December 31, 2020? HINT: Use a T account to track account
balances for A/R and ADA.
c) What is the net realizable value of the accounts receivable on December 31, 2020?
Solution (15 min.)

a) Accounts Receivable .................................................................... 1,500,000
Service Revenue .................................................................... 1,500,000
(To record credit service revenue)
Cash ............................................................................................. 1,300,000

Accounts Receivable .............................................................. 1,300,000
(To record collection of receivables)
Allowance for Doubtful Accounts .................................................. 37,000

Accounts Receivable .............................................................. 37,000
(To writeoff specific accounts)
Accounts Receivable .................................................................... 4,000

Allowance for Doubtful Accounts ............................................ 4,000
(To reverse writeoff of account)
Cash ............................................................................................. 4,000

Accounts Receivable .............................................................. 4,000
(To record collection of account.)
b) ALLOWANCE FOR DOUBTFUL

ACCOUNTS RECEIVABLE ACCOUNTS
450,000 37,000 45,000
1,500,000 1,300,000 4,000
4,000 37,000 Bal. 12,000
4,000
Bal. 613,000
Required balance ($613,000 .05) .................................................................. $30,650

Balance before adjustment ............................................................................. 12,000
Adjustment required ........................................................................................ $18,650
Dec. 31 Bad Debts Expense ................................. 18,650

Allowance for Doubtful Accounts ............................ 18,650
c) A/R (net realizable value) $582,350 ($613,000 – $30,650)
123. Janelle Co Inc. generated $5.5 million in credit sales during the current year. Based on
past experience, it is estimated that 1.5% of all credit sales will prove to be uncollectible. The
balance of the allowance for doubtful accounts at December 31 is $8,900 credit. Accounts
receivable at December 31 consists of the following:
Account Classification Amount
1–30 days $850,000
31–60 days 175,000
61–90 days 120,000
91–120 days 50,000
Over 120 days 20,000
Instructions
a) Calculate and record the journal entry for bad debt expense for the current year using the
percentage of credit sales method.
b) Janelle Co. has decided to writeoff all the accounts that were over 120 days old. Record the
journal entry.
c) What is the balance for Accounts Receivable as shown on the December 31 statement of
financial position?
d) One of the customers whose $5,000 account was written off, paid Janelle Co. in full.
Record the journal entry.
Solution (10 min.)

a) Bad debt expense ($5,500,000 ×.015) .............. $82,500
Allowance for doubtful accounts (XA) ......... 82,500
b) Allowance for doubtful accounts (XA) ................ 20,000

Accounts Receivable (A) ............................ 20,000
c) Accounts Receivable ($1,215,000 – $20,000) ... 1,195,000

Less Allowance for doubtful accounts ............... 71,400
($8,900 + $82,500 – $20,000)
Net A/R ............................................................. 1,123,600
d) Accounts Receivable (A) ................................... 5,000

Cash (A) ............................................................ 5,000
124. Quality Inc. generated $2.75 million in credit sales during the current year. The balance of
the allowance for doubtful accounts at December 31 is $2,500 debit. Accounts receivable at
December 31 consists of the following:
Estimated Percentage
Account Classification Amount Uncollectible

1–30 days $350,000 1.5%
31–60 days 180,000 3%
61–90 days 55,000 5%
Over 90 days 21,000 25%
Instructions
a) Calculate and record the journal entry for bad debt expense for the current year using the
aging of accounts receivable approach.
b) Quality Inc. has decided to write off $15,000 of the accounts that were over 90 days old.
Record the journal entry.
c) What is the balance for Accounts Receivable as shown on the December 31 statement of
financial position?
d) One of the customers whose $2,200 account was written off paid in full. Record the journal
entry.
e) Is the balance in the allowance for doubtful accounts affected by the transaction in part d)?
If so, by how much? What is the new balance?
Solution (12 min.)

a) Required balance for allowance for doubtful accounts:
1–30 days $350,000 1.5% $ 5,250
31–60 days 180,000 3% 5,400
61–90 days 55,000 5% 2,750
Over 90 days 21,000 25% 5,250
$18,650
Existing balance in the account (debit) 2,500
Entry required (bad debt expense) $21,150
Bad debt expense (SE) ..................................... 21,150

b) Allowance for doubtful accounts (XA) ................ 15,000

c) Accounts Receivable ($606,000 – $15,000) ...... 591,000

Less Allowance for doubtful accounts ($18,650 – $15,000) 3,650
Net A/R ............................................................. 587,350
d) Accounts Receivable (A) ................................... 2,200

Cash (A) ............................................................ 2,200
e) The allowance for doubtful accounts balance would increase by $2,200; the new credit
balance would be $5,850.
125. Matt’s Magic Store has credit sales of $500,000 in 2020 and a debit balance of $800 in the
Allowance for Doubtful Accounts at year end. As of December 31, 2020, $120,000 of accounts
receivable remain uncollected. Matt’s Magic uses the percentage of credit sales method. The
historical level of bad debts expense is 2.5%.
Instructions
a) Prepare the adjusting entry to record the estimated uncollectible accounts expense on
December 31, 2020.
b) Show the Statement of Financial Position presentation of accounts receivable on December
31, 2020.
Solution (8 min.)
a) Bad Debts Expense ...................................................................... 12,500
Allowance for Doubtful Accounts ............................................ 12,500
(*Total Credit Sales x 2.5% = $12,500)
b) Accounts Receivable $120,000

Less: Allowance for Doubtful Accounts 11,700 $108,300
($12,500 – $800 = $11,700)
126. Triple H Enterprises Ltd. revealed the following information for the years ended December
31, 2020 and 2019:
2020 2019
Current Assets
Cash ........................................................ $ 25,000 $ 24,500
Accounts Receivable ................................ 435,000 550,000
Inventory .................................................. 675,000 630,000
Total Current Assets ................................ $1,135,000 $1,204,500
Current Liabilities ..................................... $1,040,000 $1,091,000
Net Credit Sales ....................................... $4,054,000 $4,169,000
Triple H Enterprise’s credit terms are net 30 days.
Instructions
a) Calculate Triple H’s 2020 and 2019 current ratio.
b) Calculate Triple H’s quick ratio for 2020 and 2019.
c) Comment on Triple H’s year over year liquidity position.
d) Calculate Triple H’s accounts receivable turnover ratio for 2020.
e) On the average how long does it take Triple H to collect its accounts receivable? Is this
good? If not, what types of things might Triple H consider in order to improve its
collections?
Solution
a) Current Ratio = Current Assets / Current Liabilities
2020: 1,135,000 / 1,040,000 = 1.09

2019: 1,204,500/ 1,091,000 =1.10
b) Quick Ratio = Current Assets – Inventory – Prepaid expenses \ Current Liabilities
2020: (1,135,000 – 675,000 – 0) / 1,040,000 = 0.44

2019: (1,204,500 –630,000 – 0) / 1,091,000 = 0.53
c) The current ratio is stable year over year and indicates that on average Triple H has $1.10
in current assets for every dollar in current liabilities. When inventory is subtracted from
current assets the company only has $0.44 in current assets for every dollar in current debt
in 2020 as measured by the quick ratio. The quick ratio in 2020 has also further eroded
when compared to the quick ratio of.53 in 2019. The quick ratio for both 2020 and 2019 is
concerning, particularly if inventory is not easily liquidated. This could compromise the
company’s ability to meet current obligations.
d) Accounts Receivable turnover ratio= Credit sales / Average Accounts Receivable
2020: 4,054,000 / (435,000 + 550,000) / 2 = 4,054,000 / 492,500 = 8.23
e) Average collection period = 365 days / A/R Turnover

= 365 / 8.23
= 44.35 days
Therefore: on average it takes Triple H 44 days to collect its receivables. Given that Tripe
H’s credit terms are net 30 this is not very good. Triple H can improve collections by
accepting credit cards or offering early payment discounts.
127. Deerling Enterprise Ltd. revealed the following information for the years ended December
31, 2019 and 2020:
2020 2019
Current Assets
Cash ........................................................ $ 45,000 $ 46,250
Accounts Receivable ................................ 547,500 699,000
Inventory .................................................. 1,065,000 1,089,000
Prepaid expenses .................................... 4,000 4,000
Total Current Assets ................................ $1,661,500 $1,838,250
Current Liabilities ..................................... $1,040,000 $1,091,000
Net Credit Sales ....................................... $4,054,000 $4,169,000
Deerling Enterprise’s credit terms are net 30 days.
Instructions
a) Calculate Deerling Enterprise’s 2020 and 2019 current ratio.
b) Calculate Deerling Enterprise’s quick ratio for 2020 and 2019.
c) Calculate Deerling Enterprise’s Accounts Receivable turnover ratio for 2020.
d) On the average how long does it take Deerling Enterprise to collect its accounts receivable?
Solution
a) Current Ratio = Current Assets / Current Liabilities
2020: 1,661,500 / 1,040,000 = 1.60
2019: 1,838,250/ 1,091,000 =1.68
b) Quick Ratio = Current Assets – Inventory – Prepaid expenses \ Current Liabilities
2020: 1,661,500 – 1,065,000 – 4,000 / 1,040,000 = 0.57

2019: 1,838,250 –1,089,000 – 4,000 / 1,091,000 = 0.68
c) Accounts Receivable turnover ratio= Credit sales / Average Accounts Receivable
2020: 4,054,000 / (547,500 + 699,000) / 2 = 4,054,000 / 623,250 = 6.50
d) Average collection period = 365 days / A/R Turnover

= 365 / 6.50
= 56.15 days
Therefore on average it takes Clever 56 days to collect their receivables.
MATCHING
128. Listed below are a set of terms and a set of definitions. Match each term to the appropriate
definition by placing its letter in the space provided.
TERMS
A. Current ratio G. Aging of accounts receivable method
B. Internal control H. Recovery
C. Factoring I. Physical controls
D. Allowance method J. Quick Ratio
E. Writeoff K. Direct writeoff method
F. Carrying amount
DEFINITIONS
____ 1. Collection of a specific accounts receivable that has been previously written off
____ 2. Designed to protect assets from theft, diversion, damage or destruction
____ 3. Full value of accounts receivable less the allowance for doubtful accounts
____ 4. Estimates are made in regards to the uncollectible amount and a bad debt
expense is recorded in the same period as the credit sales
____ 5. The process of removing a customer’s account receivable from the books when
the account is deemed uncollectible
____ 6. Ratio that measures the entity’s short-term liquidity
____ 7. Selling of accounts receivable
____ 8. Method of estimating bad debt based on collectibility of the accounts receivable
____ 9. Recognize bad debt only when the company knows the customer will not pay
____ 10. System established to promote safeguarding of assets
____ 11. Used to assess short-term liquidity but only includes quick assets
ANSWERS TO MATCHING (5 min.)
1. H
2. I
3. F
4. D
5. E
6. A
7. C
8. G
9. K
10. B
11. J
SHORT-ANSWER ESSAY QUESTIONS
129. Identify and describe the five limitations of internal control.
Solution (10 min.)

1. Cost / Benefit – Management will only establish controls where the benefits that result
exceed the costs of implementing.
2. Human Error – errors in design may limit effectiveness. Also controls that rely on judgement
of individual employees are only as effective as their decision making.
3. Collusion – when two or more individuals work together to circumvent the existing internal
controls.
4. Management Override – even if an internal control is well designed a manager may be able
to override it by virtue of their position.
5. Changing Circumstance – internal controls that were well designed may become ineffective
as a result of changing circumstances such as new technology.
130. Explain the main principles of internal control.
Solution
An internal control system includes (1) physical controls (locks, alarms, cash registers); (2)
assignment of responsibilities (making one person responsible for each task); (3) separation of
duties (separation of transaction authorization, recording, and asset custody); (4) independent
verification (either internal or external); and (5) documentation (receipts, invoices, and so on).
131. The following five items are usually considered to be part of the bank reconciliation
process:
1. Outstanding cheques
2. Deposits in transit
3. NSF Cheques
4. Bank collection of notes receivable on company’s behalf
5. Service charge
Instructions
Classify each item as (1) an addition to the book balance; (2) an addition to the bank balance;
(3) a subtraction from the book balance; or (4) a subtraction from the bank balance.
Solution (5 min.)
1. (4) a subtraction from the bank balance
2. (2) an addition to the bank balance
3. (3) a subtraction from the book balance
4. (1) an addition to the book balance
5. (3) a subtraction from the book balance
132. Explain why companies sell on account and identify the additional costs that result from
this decision.
Solution
Companies sell on account to increase total sales, remain competitive, and generate additional
revenue (interest). When selling on account, companies incur additional costs, including wages
for the credit-granting function, wages for the collections function, and bad debts expense.
133. Describe the how accounts receivable is valued.
Solution
Accounts receivable are reflected on the statement of financial position at their carrying amount,
which is equal to the full amount of all receivables less the allowance for doubtful accounts. The
allowance for doubtful accounts represents management’s best estimate of the total accounts
receivable that it expects it will be unable to collect.
134. Which of the two methods of accounting for uncollectible accounts, the allowance method
or the direct writeoff method, is most acceptable? Why?
Solution (8 min.)
The allowance method requires that an estimate of bad debts be made and matched to the
revenue earned in the related period. This leads to more accurate financial reporting and is
therefore the method that is most acceptable.
135. Briefly explain the two generally acceptable ways to estimate the expected uncollectible
accounts receivable at the end of a period. Explain how the allowance for doubtful accounts is
affected under each method.
Solution (8 min.)
The two methods of estimating bad debts under the allowance method are: the percentage of
credit sales method and the aging of accounts receivable method.
With the percentage of credit sales, the estimated bad debts expense is determined using a
percentage (historic or industry average) of credit sales revenue. Once estimated, the bad debt
expense increases the amount in the Allowance for Doubtful Accounts account.
With the aging of accounts receivable method, an estimate of uncollectible accounts is made
using a percentage (historic or industry average), with bad debts expense equal to the amount
required to adjust the Allowance for Doubtful Accounts balance to this estimated total. An
analysis of allowance for doubtful accounts is required to determine bad debts expense.
136. Describe the direct writeoff method when accounting for bad debt expense and explain
when it is appropriate to use this method and demonstrate how bad debt expense would be
accounted for?
Solution (10 min.)

The direct writeoff method has companies recognizing bad debt expense only when they can
directly writeoff a specific customer’s account, so when the customer is not going to pay.
Company’s should wait until the account has reached an age where by the company’s policy
states that it should be written off, ( i.e., 180 day overdue) or when there is specific indication (
ie bankruptcy notification). The direct method is often used by companies with an immaterial
amount of bad debts. The entry would appear as follows:
Dr. Bad Debt Expense

Cr. A/R
137. Identify and describe the three methods a company can use to shorten its cash-to-cash
cycle, and explain why this is important.
Solution (10–12 min.)

Companies may engage in the following strategies to shorten the cash-to-cash cycle:
1. Accept credit cards as a form of payment – payment is received within a day or two;
however it does come at a cost. Merchant fees may vary from 1.5% - 4% This is known as
a credit card discount.
2. Offering early payment discounts known as sales discounts, this motivates customers to
pay “early” or prior to the 30 day credit period. Maybe expressed as 2/10 n 30.
3. Companies may sell their accounts receivable to a financial institution at a discount. This is
called factoring.
A company wants to increase its cash collections to make more cash available for day-to-day
operating transactions and decrease a company’s reliance on an operating line of credit and the
incurrence of costs associated with such a debt instrument.
138. Explain the concept of liquidity and how it is measured.
Solution
Liquidity refers to a company’s ability to convert assets into cash so that liabilities can be paid.
The current ratio is equal to current assets divided by current liabilities and is a measure of the
amount of current assets the company has relative to each dollar of current liabilities.
The quick ratio is a stricter measure of liquidity than the current ratio. This is because it is
determined without including inventory and prepaid expenses. Specifically, the ratio is equal to
current assets less inventory and prepaids, divided by current liabilities.
ESSAY QUESTIONS
139. A client who is an owner/operator of a small convenience store has come to you for advice
on how to prepare a bank reconciliation. She has read somewhere that there are definite
benefits to preparing a bank reconciliation every month, but she is not sure how doing so will
help her.
Instructions
Provide your client with a summary of how to prepare a bank reconciliation. Explain how
preparing monthly bank reconciliations can provide important control procedures for her
business.
Solution (10 min.)

A bank reconciliation is the procedure used to ensure that the accounting records agree with the
bank records. The bank reconciliation procedure consists of reconciling the balance recorded in
the general ledger account by the corporation to the bank statement received from the bank.
The main reconciling items are outstanding cheques, outstanding deposits (deposits recorded
by the corporation on one day but not received or recorded by the bank until the next business
day), bank service charges that have been deducted from the bank statement but not recorded
in the general ledger, errors in recording items by the business or the bank, and other items
which cause differences between the business and the bank.
A convenience store has cash sales on a daily basis. The main concern is control of cash to
ensure it is not lost or stolen. Proper control of cash includes policies to ensure that all cash is
deposited into the bank account on a daily basis and use of safes and cash registers. A bank
reconciliation also provides control over cash and helps to manage cash most effectively. The
reconciliation provides assurance that all transactions affecting the bank account have been
properly recorded and no transactions have been missed. The person who prepares the bank
reconciliation should not have access to the bank account or the accounting records. However,
in this case, the small business is managed by the owner.
LEGAL NOTICE
Copyright © 2018 by John Wiley & Sons Canada, Ltd. or related companies. All rights
reserved.
The data contained in these files are protected by copyright. This manual is furnished
under licence and may be used only in accordance with the terms of such licence.
The material provided herein may not be downloaded, reproduced, stored in a retrieval
system, modified, made available on a network, used to create derivative works, or
transmitted in any form or by any means, electronic, mechanical, photocopying,
recording, scanning, or otherwise without the prior written permission of John Wiley &
Sons Canada, Ltd.
MMXVIII iii F2
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corrisponde al giro esterno della seconda cavea, donde si saliva alle
logge superiori di archi laterizii, destinate per le donne e per la plebe.
Da questo deambulacrum, non è superfluo al visitatore delle rovine
di Pompei il sapere come si goda del più delizioso orizzonte, poichè
rimpetto si abbia il Vesuvio, a settentrione i monti Irpini, ad oriente i
monti Lattarj, sulla china dei quali posa Sorrento, e a mezzodì Napoli
e le sue isole avvolte come da una rosea nebbia trasparente.
Forse a diminuzione di spesa, e forse anche a renderlo proprio agli
spettacoli di naumachia, se si avessero voluti offrire, ma che però il
fatto d’essere città marittima esclude che vi si avessero a dare,
perchè certo sarebbero riusciti inferiori ad ogni aspettazione ed a
quelli che offerir si potevano sul mare stesso, l’edificio era stato
costruito in una specie di bacino, scavato in parte artificialmente, per
modo che l’arena si trovasse tanto al di sotto del livello del suolo per
quanto le mura si elevavano al disopra.
Vien misurato il più gran diametro dell’anfiteatro di 130 metri, il più
piccolo di 102. La direzione dell’ovale è da N. a S.: alle sue estremità
si trovano i due principali ingressi, i quali mettono all’arena di forma
elittica.
Appunto per la suindicata ragione, che l’arena era incavata nella
terra, l’ingresso settentrionale che riesce a quella e che forma un
breve porticato a vôlta, ha il pavimento lastricato di pietra vulcanica
in declivio, ed ha nei lati l’incanalatura per ricevere le acque.
Due grandi nicchie sono a destra ed a sinistra di tale ingresso, le
quali dovevano contenere le statue di due benemeriti cittadini, e di
chi fossero ce lo rivelano le opportune iscrizioni che sotto di esse si
leggono.
Quella a destra è così concepita:
C . CVSPIVS C . F . PANSA PONTIF
D . VIR . I . D . [120]
Quella a sinistra, così:

C. CVSPIVS . C . F . PANSA PATER D . V . I . D .
IIII QVINQ . PRAEF ID . EX D . D . LEGE PETRON . [121]
Più avanti fornirò gli schiarimenti intorno a questa legge Petronia,

della quale si fa nella iscrizione cenno, riservandoli essi
all’argomento degli spettacoli gladiatorii.
Il marchese Arditi, nel trattare della legge Petronia, saviamente
opina che l’iscrizione e la statua del prefetto Cuspio Pansa siano
state collocate nell’anfiteatro prima del tremuoto dell’anno 63, ed
anche prima della sospensione degli spettacoli ordinata da Nerone
nel 59.
Avanti d’entrare nell’arena, o sia nella gran piazza de’ combattimenti
e delle caccie, detta appunto arena, dalla sabbia che vi era sempre
sparsa, onde il sangue che si versava dagli uomini e dalle fiere, a
scanso di ribrezzo, avesse presto a iscomparire, trovasi a destra e a
manca l’entrata in un criptoportico, o corridojo circolare sotterraneo
rischiarato da numerosi spiragli, da cui per diversi vomitorj si
ascendeva a’ gradini della prima e seconda cavea, dove sedevano i
magistrati e i più cospicui cittadini e i collegi. Questo sotterraneo,
che girava tutt’all’intorno dell’anfiteatro, è degno di considerazione
per la sua forma intatta e per non riscontrarsi in alcun altro
anfiteatro. Le pareti di questo portico hanno tuttavia iscrizioni scritte
in rosso ed in nero, che accennano a nomi de’ magistrati, forse
benemeriti dei ludi al circo, e leggonsene altre contenenti officiosità
pel loro indirizzo e tal altra eziandio che suona ingiuria, o lode a
talun combattente. Ho già notato come fosse insito nel costume de’
Pompejani di dare sfogo ai sentimenti proprj, esprimendoli sui muri
delle case o di qualunque altro edificio.
Ma eccoci nell’elissi dell’anfiteatro. Appena entrato, io sperimentai,
alzando la voce, l’eco che vi regna, e che già rammentai al lettore
quando dipingendogli l’estrema catastrofe, affermai, come essa
avesse contribuito a rendere maggiore l’orrore della situazione.
L’arena, tutta recinta d’un parapetto, o podio dell’altezza di circa due
metri, sul quale alzavasi eziandio un graticcio di ferro, per tutelare gli
spettatori dal furore delle fiere che, istigate dal combattimento,
avrebbero potuto gittarsi su di essi. Siffatto parapetto era tutto
dipinto a soggetti convenienti al luogo; ma l’azione dell’aria ve li ha
fatti tutti sparire. Si rammenta da chi si trovò all’epoca della scoperta
di questo monumento, che fu il 16 novembre 1748 [122], che fra tali
dipinture una vi fosse che raffigurava un lanista o maestro de’
gladiatori, che in mezzo a questi, armato di bacchetta (rudis) era in
atto di giudicare cui spettasse colla vittoria nella lotta il premio del
vincitore, sul quale svolazzavano due genii alati recanti corone nelle
mani.
Ma non si smarrirono le iscrizioni, che nel parapetto stesso si
lessero, dedicate a memorare i nomi di que’ magistrati che meglio
avevano contribuito alla restaurazione dell’anfiteatro, rifacendo i
cunei e riparando le altre rovine, che erano stati altresì i
sovrintendenti, o prefetti degli spettacoli.
Eccole, quali sono riferite dalle Guide e dagli illustratori di Pompei.
MAG . PAG . AVG . F . S . PRO . LVD . EX . D . D .
T . ATVLLIVS . C . F . CELER . II . VIR . PRO . LVD . LV . CVN
C . F . C . EX . D . D
L . SAGINIVS . II . VIR . I . D . PRO . LV . LV . EX . D . D . CVN
N . ISTACIDIVS . N . F . CILIX . II . VIR . PRO . LVD. LVM
A . AVDIVS A . F . . RVFVS . II . VIR . PRO . LVD .
P . CAESETIVS . SEX . F . CAPITO . II . VIR . PRO . LVD . LVM
M. CANTRIVS. M F. MARCELLVS. II. VIR. LVD LVM CVNEOS. III F. C.
EX. D D. [123]
Importa che io qui traduca una nota che Bréton appone a queste
interessanti iscrizioni.
«Queste iscrizioni, scrive egli, presentano un enigma assai difficile a
sciogliere. Che vogliono esse dire queste parole PRO LVD, pro
ludis? Si è creduto dover tradurre per i giuochi, e scorgere quindi
nell’iscrizione la menzione dei giuochi che venivan celebrati
nell’anfiteatro [124] da certi magistrati. Questa interpretazione
sarebbe stata accettabile, se nella terza iscrizione non si trovassero
le parole PRO LVD . LVM . che il P. Garrucci legge pro ludorum
luminatione, per l’illuminazione dei giuochi, e Mommsen pro ludorum
luminibus; per i lumi dei giuochi. Questa spiegazione non essendoci
sembrata in tutto soddisfacente noi abbiamo consultato uno de’
nostri dotti colleghi, il signor Léon Rénier, noto per gli studj speciali
che ha fatti dell’epigrafia antica. I nostri lettori saran lieti di trovar qui
le sue risposte, delle quali abbiamo creduto adottare le conclusioni
così ben motivate.
«L’interpretazione del P. Garrucci, e quella di Mommsen, dice Léon
Rénier, proverebbero, se si fosse costretti d’attenervisi, che si davan
dei giuochi con illuminazione nell’anfiteatro di Pompei, ciò che non
mi pare da ammettere. Ecco come io interpreto il passo
dell’iscrizione: Marcus CANTRIVS, Marci Filius MARCELLVS duum
VIR PRO LVDis LVMinatione, CVNEOS III Faciendos Curavit EX
Decreto Decurionum. PRO LUDis, LVMinatione, cioè in luogo dei
giuochi e dell’illuminazione, ch’ei doveva dare nell’occasione della
sua elezione alle funzioni di Duumviro. L’elissi della congiunzione et
non ha nulla che debba sorprenderci: era essa di regola nello stile
epigrafico. (Ved. Morcelli, De Stylo inscr. p. 4486 ed. Rom.) Gli onori
municipali si pagavano ordinariamente con giuochi, spettacoli,
distribuzioni di sparsioni, ecc.: spese improduttive che si
scontravano talvolta come qui, con altre spese equivalenti il cui
effetto era più durevole. In una iscrizione di Djemilah (l’antica
Colonia Cuiculitanorum), che io ho pubblicato in una memoria che fa
parte dell’ultimo volume della Società degli Antiquari di Francia, si
vede un magistrato di questa città erigere una basilica, in luogo
d’uno spettacolo di gladiatori ch’ei doveva dare. Si potrebbero citare
molti esempi analoghi.
«Le interpretazioni del P. Garrucci e di Mommsen sono affatto
congetturali; la mia si appoggia sopra esempj che mi sembrano
concludenti. Il primo ne è fornito da un’iscrizione di Roma edita dal
Fabretti Inscript. Domestic. p. 243 n. 556, e da Orelli p. 3324, la
quale termina così: POPVLO VISCERATIonem GLADIATORES
DEDIT LVMINAtionem LVDOS Junoni Sospitæ Magnæ Reginæ
SOLIS FECIT.
«Il secondo si trova in un’iscrizione della raccolta di Muratori pl. 652.
n. 6, nella quale si legge:
..... VS . SPORTVLAS ITEM FIERI ET
..... PVERIS NVCES SPARGI DIE Suprascripto ET
LVMINATIONE
«Quest’ultima iscrizione è un’iscrizione funeraria, nella quale non

v’ha questione nè di giuochi nè di spettacoli, ciò che mi fa pensare
che in quella dell’anfiteatro di Pompei non vi sia connessità fra le
parole LVD e LUM; queste parole designano due spettacoli differenti,
che i nuovi magistrati dovevano dare al popolo e da cui un decreto
dei decurioni gli aveva dispensati, loro imponendo l’obbligo di
applicare alla costruzione dell’anfiteatro una somma almeno
equivalente a quella ch’essi avevano così economizzata» [125].
Per quanto ragionate codeste conclusioni, non mi so risolvere ad
accettarle; perocchè fin quando io trovi, come in questa iscrizione di
Marco Cantrio, che cuneos tres faciendos curavit, che, cioè, veggo
menzionata un’opera, allora ben posso spiegarmi il pro ludis del
modo che interpretò Rénier, vale a dire in sostituzione dei giuochi;
ma quando trovo il pro ludis come nell’iscrizione
M . OCULATIUS M . F . VERVS II VIR PRO LUDIS
che ho riferita nel Capitolo precedente del Teatro Comico e che

stava sulla soglia del medesimo in lettere di bronzo, senz’altra
indicazione che m’additi cosa siasi dato o fatto in luogo dei giuochi,
allora mi è permesso di dubitare che l’interpretazione di Rénier abbia
sciolto l’enigma e di credere piuttosto che possa intendersi il pro
ludis, come magistrato sopra i giuochi, cioè sovrintendente degli
spettacoli.
E tanto più mi confermo in ciò, in quanto io non abbia rinvenuto
autorità che mi convinca che gli spettacoli dati dai nuovi magistrati,
fossero un verace obbligo inerente alla loro nomina; anzi che una
liberalità, quantunque forzata, e che però potesse intervenire decreto
di decurioni a sostituire ad una spesa obbligatoria un’altra spesa.
Ritornando ora alla difesa del podio, vuolsi osservare come anche
un canal d’acqua vi corresse lungh’esso; onde così non fosse
permesso alle fiere di accostarvisi di troppo.
La cavea era regolata e distribuita del modo stesso che accennai,
parlando de’ teatri, nei capitoli antecedenti, partita cioè in tre zone
col mezzo di due gallerie. La più bassa riserbata, come pur testè ho
detto, ai principali magistrati, ai capi della colonia, a’ sacerdoti e
sacerdotesse ed il posto che ognun d’essi occupava sopra i gradini
era circoscritto in due linee col corrispondente numero distinto in
rosso; e quel numero doveva corrispondere alla tessera che si
presentava entrando all’impiegato denominato Locarius, o
pigionante di sedili. Il quale occupava prima i posti negli spettacoli, o
li accaparrava per cederli poi a chi giungesse tardi, contro
determinato prezzo.
L’affaccendarsi di costui era singolarmente per le dame, imitate pur
dalle moderne, che ultime sempre giungevano allo spettacolo,
trattenute dalle lunghe e studiate toelette; onde il nostro Savioli,
facendo allusione nella sua Ode Il Teatro a siffatta consuetudine,
cantava:
Tardi ai roman’ spettacoli

L’altera Giulia venne,
Ma i primi onor del Lazio
Su l’altre belle ottenne.
Marziale, ne’ suoi epigrammi, parla di questi locarii nel verso:
Hermes divitiæ locariorum [126];
ed io, tenendo conto di tali inservienti de’ pubblici trattenimenti,

addito origini di pratiche pur oggidì sussistenti, e riconfermo il
concetto del Savio, che disse nulla essere nuovo sotto il sole.
Questa prima cavea dell’anfiteatro era divisa da una precinzione di
pietre di tufo dall’altra cavea superiore e conteneva diversi muri
traversali che ripartivano il podio stesso. Così aveva quattro
ripartimenti, due verso le porte di cinque gradini, e due altri nel
mezzo del giro di quattro gradini assai più larghi e spaziosi, aventi
poi ognuno le proprie porte separate.
La media, o seconda cavea era assegnata ai cittadini distinti, e più
agiati, ai diversi collegi e ai militari ed aveva trenta gradini.
Termina finalmente colla summa cavea costituita di diciotto fila di
gradini ed era riserbata al popolo e dietro di esso si collocava la
plebe, dopo la quale, in bell’ordine di archi sorgevano le logge per le
donne, che si formavano degli archi stessi sorretti da colonne, alle
quali logge, per essere coperte, Calpurnio chiamò col nome di
cattedre ne’ versi in cui rammenta di aver dovuto ascendere fin su su
nell’ultima fila dell’Anfiteatro, per essere la infima e media cavea
occupate da magistrati e cavalieri:
Venimus ad sedes, ubi pulla sordida veste

Inter femineas spectabat turba cathedras,
Nam quæcumque patent sub aperta libera cœlo,
Aut eques aut nivei loca densavere tribuni [127].
Tutta la cavea ha quaranta scaglioni con altrettanti vomitorj per i

quali gli spettatori entravano ed uscivano ordinatamente; solo le
donne avevano una separata gradinata onde accedere ai loro posti;
lo che dinota ancora un riguardo che a’ dì nostri non si serba al
gentil sesso ne’ teatri, e ciò malgrado che allora fosse dal diritto
romano considerata la donna poco più di cosa, e adesso si pretenda
che i costumi illeggiadriti ne abbiano senza confronti migliorate le
condizioni.
Abbiamo già veduto nel precedente capitolo, come a temprare agli
spettatori del Teatro Tragico gli ardori canicolari, fosse stato in
Pompei e nelle altre città della Campania, prima che altrove,
immaginato il velario, cagione di tanto scandalo a’ puritani scrittori di
allora: or bene l’Anfiteatro pompeiano usava esso pure il più sovente
di questa salutare costumanza. Dirò di più: la distesa del velario era
tanto desiderata e voluta, che il Theatropola, od impresario di teatro,
o chi dava le feste, si affrettava, nel pubblico annunzio che
scrivevasi sui muri delle principali vie o de’ luoghi più affluiti di gente
ad indicare che le vele e le tende non sarebbero mancate. Ho già
recato nel capitolo nel quale parlai delle vie e degli affissi, quello in
cui Valente Flamine perpetuo di Nerone, avvertendo che ai 28 marzo
(V. Kal. aprilis) si darebbe una caccia, si dà premura di soggiungere
che vi sarebbero i velarii, et vela erunt: ora, a meglio constatare la
buona usanza, ne recherò due altri.
Un Ottavio, od un Onesimo, procuratore, poichè gli scrittori non
sanno leggere che questi due nomi sotto la lettera O della seguente
iscrizione, così annunzia una caccia, venatio, che darebbe a’ 29 di
ottobre la famiglia gladiatoria di Numerio Popidio Rufo, che a’ 20
Aprile si alzerebbero le antenne, mala, ed i velarii, vela,
nell’anfiteatro.
N . POPIDI
RVFI . FAM . GLAD . IV . K . NOV . POMPEIS
VENATIONE ET . XII . K . MAI
MALA . ET . VELA . ERVNT
Q . PROCVRATOR . FELICITAS . [128]
Si argomenta da tale avviso che i velarii si rizzassero nell’anfiteatro

appena che il caldo incominciasse vivamente a farsi sentire e a dar
fastidio la sferza del sole e che, se si credeva avvertire una caccia
gladiatoria, ancorchè lontana, perchè più spettacolosa, non toglieva
che prima si facessero altri minori divertimenti nell’anfiteatro; senza
di che non avrebbe senso il dirsi che si rizzerebbero antenne a vele
nell’aprile, per una caccia che dovesse seguire sei mesi nell’ottobre.
L’altro manifesto che si lesse su d’un muro della Basilica si esprime
così:
N . FESTI AMPLIATI
FAMILIA . GLADIATORIA . PVGNA . ITERVM
PUGNA . XVI . X IVN VENAT . VELA. [129]
Or bene, nel cornicione dell’anfiteatro sì avvisano ancora alcune

pietre aventi dei fori, ne’ quali si infliggevano le aste od antenne
(mali, o mala come è scritto nella surriferita iscrizione) a cui venivano
raccomandati i capi del velario e le funi che lo sostenevano.
Abbiam veduto superiormente come alle due estremità della elissi
dell’anfiteatro vi fossero due porte: noterò ora che un’altra più
piccola ve ne fosse, la quale era detta Libitinense, il cui scopo
avverrà di conoscere più avanti, parlando de’ gladiatori.
Per questa porticina entravano poi le bestie feroci, le quali, per
l’angustia di essa, non avrebbero potuto ritornare indietro o volgersi
dai lati. Una cameretta vi è presso, forse lo spoliario, luogo nel quale
i gladiatori uccisi venivano spogliati delle loro armi e delle loro
vestimenta, come troviam ricordato in Seneca ed in Lampridio [130]:
in essa si trovarono le ossa d’un leone. Questa circostanza e l’altra
che già ricordai di eguali avanzi di leoni rinvenuti nelle vicinanze
avvalorano l’affermazione di chi scrisse che il cataclisma
sorprendesse i Pompejani intenti ai giuochi dell’anfiteatro. Per lo
meno ci provano che recenti ne dovessero essere stati i divertimenti.
In quanto a me, non sono alieno del dividere l’opinione di coloro che
osservarono che il novissimo giorno fosse pure un dì a’ ludi circensi
destinato, confermandone altresì il fatto d’essersi trovati verso
l’ingresso e ne’ corridoi dell’anfiteatro sei scheletri, a fianco di essi
due braccialetti, due anelli, una moneta ed altri frammenti d’oro,
quattro belle monete di bronzo, un involto di drappi ed una lampada.
Perchè avrebbero dovuto rinvenirsi questi scheletri e questi oggetti
in luogo ordinariamente chiuso, oltre che all’estremità della città, se
non per essere stato in quel giorno aperto a pubblico divertimento?
Non si potranno ad ogni modo per questi dati abbastanza
significanti, avere per sognatori coloro che la detta opinione
sostennero.
Altre piccole camere vi sono ai lati delle due porte principali ed erano
i cataboli, o stalle in cui le belve attendevano d’essere lanciate
nell’anfiteatro.
Finalmente chiuderò la descrizione dell’anfiteatro pompejano col far
cenno del triclinio, che di contro al principale ingresso di esso si
vede. Era uso presso gli antichi che il giorno innanzi l’esecuzione dei
condannati a morte si imbandisse loro un publico banchetto,
chiamato libero. In cotale occasione si largheggiava ad essi di ogni
ricercata vivanda. Chateaubriand, che di tal costume favella ne’ suoi
Martyrs, non può trattenersi dallo scagliarsi contro di esso, come di
raffinamento della legge e come brutale clemenza del paganesimo;
l’una, perchè voleva rendere la vita cara a quelli che dovevano
perderla; l’altra, che non considerando l’uomo che fatto per i piaceri,
ne lo voleva colmare nel mentre che spirava. Anche i gladiatori,
devoti a morte, poichè non avvenisse mai che talun d’essi non
restasse sull’arena, avevan diritto, prima del giorno dello spettacolo,
a questo publico pasto. Era poi nella piazza cinta di muro, in
prossimità al triclinio, che i gladiatori attendevano l’ora di entrare alla
lotta nell’anfiteatro.
Ora poichè conosciamo il luogo che in Pompei serviva d’arringo a’
giuochi circensi, e coll’anfiteatro di questa città, possiam dire di
conoscere quelli pure delle altre e anche quello più famoso di Roma;
passiamo a trattare de’ ludi, che più frequentemente solevano
celebrarsi in essi, e delle persone che vi pigliavano parte.
I più consueti e desiderati spettacoli dell’Anfiteatro erano le corse,
che prima si facevano, come già vedemmo, nel Circo; i ludi gladiatorj
e le cacce, che son le venationes che abbiamo in più affissi veduto
annunziate in Pompei. Le danze, le pantomime, i canti e i suoni dei
tibicini e dei fidicini erano divertimenti minori a’ quali prestavasi bensì
l’anfiteatro, ma piuttosto a riempire gli intermezzi e ad illudere
l’impazienza del publico che stava attendendo i principali spettacoli
annunziati, anzi che a costituire di per sè un vero trattenimento.
Le Corse, o fazioni degli Auriga, il lettore s’è accorto essere state
introdotte fin dai primordj di Roma, per aver io al principio ricordato il
giuoco de’ Trojani: il qual non fosse infatti che un armeggiamento a
cavallo. Molto più in onore in Grecia erano tenute le Corse, dove i
vincitori ne’ giuochi olimpici vennero consegnati alla immortalità dagli
inni di Pindaro. Colà, per responso della Pizia, a’ siffatti giuochi
annettevasi la salute della Grecia. Furono perfino misurate le epoche
dalle olimpiadi, ogni olimpiade essendo lo spazio de’ quattro anni
che scorrevano fra due celebrazioni de’ giuochi olimpici. Dall’una
all’altra olimpiade si contavano cinque anni, benchè non fossero se
non se quattro compiuti. Presso gli storici la prima olimpiade
comincia nel 776 prima di G. C. e 24 avanti la fondazione di Roma.
Dopo la 340.ª olimpiade, che finì coll’anno 440 dell’Era Volgare, più
non si trovano gli anni calcolati per mezzo delle olimpiadi.
Or si fu nella vigesima quinta olimpiade che presso quella nazione
ebbe luogo la corsa del carro a due cavalli; nella ventottesima quella
dei cavalli da sella; nella novantottesima corse con due cavalli da
maneggio nello stadio, e nella susseguente si attaccarono ad un
carro due giovani puledri condotti a mano ed un’altra corsa di un
puledro montato a guisa d’un cavallo da sella.
In Roma e nelle città italiane, dove massime negli ultimi tempi della
republica ed in quelli dell’impero si grecizzava, era più che ovvio che
que’ giuochi si importassero con quelle discipline e seguissero nel
circo dapprima e poi nell’anfiteatro e s’introducessero le corse dei
cocchi o de’ carri, currus, detti anche bighe se tirate da una coppia di
cavalli, quadrighe se da quattro. Dione nel lib. XXIX, cap. 28, parla
delle corse dei cavalli che fecero parte dei giuochi famosi che diede
Pompeo e de’ quali dirò ancora più avanti.
Le fazioni degli auriganti che si vennero presto istituendo e le quali
aspiravano alla palma nei ludi circensi, erano quattro in Roma,
distinte dal vario colore delle vestimenta loro, cioè verde, ceruleo,
rosso o bianco, onde appellavansi Prasinæ, Venetæ, Russatæ,
Albatæ. Svetonio ne fa sapere essersene di poi aggiunte altre due,
l’una di stoffa aurata, e l’altra di panno porporino. I principi perfino si
onoravano d’esserne i capi; così Caligola della Prasina, Vitellio della
Veneta. I guidatori (agitatores) montarono in prezzo e i poeti li
celebrarono, come ne fanno fede, oltre que’ di Marziale, anche i
vecchi epigrammi di M. Aurelio Dione, di Diocle, di Pompeo Eusceno
e di Fuseo. Così rimasero ricordati i nomi di Incitato caro a Caligola,
di Prasino caro a Nerone, di Passerino e Tigri diletti a Domiziano e di
Scorpo a Nerva; del quale Scorpo dettò Marziale il seguente
pomposo epitaffio:
Ille ego sum Scorpus, clamosi gloria Circi

Plausus, Roma tui deliciæque breves:
Invida quam Lachesis raptum trieteride nona,
Dum numerat palmas, credidit esse senem [131].
L’interessamento generale, la division delle opinioni, il parteggiar di

tutti per questa o quella fazione d’auriganti, e le scommesse furon
tali e tante, che parve fino un delirio. Giovenale così della fazion
Prasina attesta la propria simpatia e predilezione:
Totam hodie Romam circus capit et fragor aurem

Percutit, eventum viridis quo colligo, panni [132];
e più tardi a’ tempi di Giustiniano, per la contenzione delle fazioni

Prasina e Veneta, tanta nacque sedizione in Bisanzio che il monaco
Zonara, nel suo libro Degli Imperatori Greci, scrisse essersene
occasionata la strage di quasi quarantamila uomini; d’onde poi si
avesse ad abolire la designazione delle fazioni.
I vincitori nelle corse de’ giuochi circensi, proclamati per tali dal
Pretore, come ne ammonisce Giovenale in que’ versi:
. . . . similisque triumpho
Præda caballorum Prætor sedet [133],
uscendo dalla porta trionfale del circo fra le ovazioni frenetiche del
popolo, colle palme raccolte e della corona di lentischio recinta la
fronte, spesso assisero conviva alla mensa imperiale.
Passo rapido ora da questo subbietto, perocchè fosse, a mio
sentimento, mal propria l’arena dell’anfiteatro pompeiano a siffatto
genere di ludi, e vengo invece più distesamente a dire de’ gladiatorj,
che tutto attesta essere stati assai frequenti in Pompei.
Ed è a questo punto ch’io pongo dapprima la descrizione del Ludo
Gladiatorio che esisteva e che venne discoperta dagli scavi in
Pompei.
Ma non pensi il lettore ch’io m’intenda parlare di quella taberna, che
da parecchie Guide vien detta la Scola dei Gladiatori, la quale fu
scoperta il 12 aprile 1847 ed a cui valse un tale titolo unicamente
perchè nell’esterno di essa si trovò un’insegna dipinta che
rappresentava un combattimento di gladiatori. L’angustia di questa
esclude assolutamente ch’essa potesse servire allo scopo al quale si
vorrebbe destinata, poichè la scuola de’ gladiatori suppone che
abbia un locale atto all’esercizio della scherma e capace di
contenere, oltre i duellanti, anche il lanista, o loro maestro. Ora una
tale taberna non era atta a tanto. Più probabile è invece ch’essa
appartenesse a qualche theatropola, o impresario di pubblici
spettacoli, il quale vi tenesse ricapito per la vendita delle tessere
teatrali, o per l’allestimento dei ludi o per l’ingaggio dei gladiatori.
Tale insegna, comunque difesa da un piccolo tetto, è pressochè tutta
omai cancellata: sotto di essa vi si lesse in addietro la seguente
iscrizione:
ABIAT (HABEAT) VENERE (VENEREM) POMPEIIANA (M) IRADAM (IRATA)
QVI HOC LAESERIT [134].
Queste scorrezioni di dizione ci rivelano però il linguaggio volgare e

l’approssimazione fin d’allora all’italiano.
Ma del resto farò osservare che il soggetto dell’insegna non può in
alcun modo forzarci a ritenere a qualunque costo che la taberna
dovesse aver un’attinenza coll’arte gladiatoria e con ispettacoli, da
che sembri che il combattimento di due gladiatori fosse tema assai
frequente delle insegne, se Orazio, nella satira settima del Lib. 11,
potè lasciare scritto:
. . . . . atque ego, cum Fulvi, Rutubæque,

Aut Placideiani contento poplite miror
Prœlia, rubrica picta aut carbone: velut si
Re vera pugnent, ferient, vitentque moventes
Arma viri [135].
Il Ludo Gladiatorio piuttosto e veramente, a quante le ricerche

diligenti fatte hanno condotto a ritenere, è quell’edificio al fianco
orientale del Foro triangolare, del quale parlando, ho già mentovato,
che per tanto tempo si continuasse a designare per quartiere di
soldati. Tale designazione non era stata, siccome avvenne di tanti
altri edifici di Pompei, determinata dal capriccio, ma sì dall’esservisi
trovate alcune armature e ceppi entro i quali costrette ancora le ossa
dei piedi di varii scheletri, che s’era supposto essere stati di soldati in
punizione, i quali erano stati sorpresi dalla estrema eruzione del
Vesuvio e dalla finale catastrofe senza potersi svincolare da essi.
Questi ceppi si conservano al Museo Nazionale di Napoli e
costituisconsi di una lunga e duplice barra di ferro, avente ad eguali
intervalli venti perni rialzati che sulla cima finiscono in anelli. Tra
l’uno e l’altro di questi perni il colpevole doveva collocare i piedi, che
vi venivano serrati da un ferro traversale, che passava per quegli
anelli, ed a fianco stava la serratura a chiave che assicurava un tal
ferro.
In tutto questo edificio, scoperto nel 1766 e completamente
sbarazzato nel 1794, si contarono al momento delle prime indagini,
non meno di sessantatrè scheletri e si è questo considerevole
numero di scheletri che farebbe persistere taluno scrittore, — cui
pare improbabile che una città di non molta importanza per
popolazione come Pompei potesse contare un numero sì forte di
gladiatori, — a voler ravvisare in questo edificio una caserma di
soldati; tanto più che una piazza forte come questa dovesse invece
avere una guarnigione e per conseguenza una appropriata caserma.
Ma il P. Garrucci stabilì in una sua memoria, inserita nel tredicesimo
numero del Bollettino Archeologico Napoletano del gennaio 1823,
che quest’edificio non potesse essere che un Ludo de’ gladiatori. Nè
del resto può sembrare improbabile in Pompei il numero suddetto di
gladiatori, da che si avverta, e noi l’apprendemmo dalle iscrizioni che
riprodussi, come l’epoca dell’ultima eruzione che seppellì Pompei
coincidesse colla stagione ordinaria degli spettacoli più strepitosi
dell’anfiteatro, e che doveva pur esser quella in cui i più doviziosi
romani, che possedevan ville nel delizioso golfo napolitano,
solevano ritrovarsi nelle loro villeggiature. D’altronde se la questione
numerica della popolazione dovesse essere non solo un irrecusabile
argomento, ma ben anco un semplice argomento od una seria
congettura, non si saprebbe, per egual titolo, trovar la ragione
d’essere del vasto anfiteatro. Ma ho già notato invece che agli
spettacoli di Pompei intervenissero pure dalle vicine terre e castella
e, i fatti storici alla mano, ciò si è incontrovertibilmente da me
stabilito.
Questo Ludo adunque è un vasto parallelogramma, nel quale i
gladiatori venivano istruiti a combattere da un lanista o maestro di
scherma. Era questi o il proprietario d’una compagnia di tali uomini,
che li locava a chi volesse offrire uno spettacolo gladiatorio; od
anche solo l’istruttore de’ gladiatori appartenenti allo stato, e perciò
detti cæsarei. Tale parallelogramma era tutto circondato di portici e
d’architettura dorica a due piani, sostenuti da sessantaquattro
colonne di tufo rivestite di stucco e scannellate nella parte inferiore.
Nel giro del portico terreno vi sono molte camere, ed in quelle verso
il lato occidentale si trovarono i suddetti istrumenti di punizione.
Nell’interno del portico, sulle colonne e nelle camere erano graffite
parecchie iscrizioni, fra le quali è riportata da tutti e non per anco
decifrata con soddisfazione, e per me affatto di colore oscuro, la
seguente:
VHI . K . FEBR .
TABVLAS POSITAS
IN MVSCARIO
CCC . VIIII . SS . CCCC . XXX .
Dal pianterreno si ascendeva per mezzo d’una scala in angolo

presso le camere ad uso di prigione al piano superiore. Non fa ora
all’argomento mio di tener conto degli oggetti, fra’ quali molti
muliebri, qui rinvenuti negli scavi: perocchè debba affrettarmi ad
entrare più spiccio nel tema di questi gladiatori.
Roma aveva parecchi di questi ludi, e furon noti il Ludus Gallicus, il
Dacicus, il Magnus, il Mamertinus, l’Æmilius. A questi non eran
preposti soltanto i lanista ma de’ procuratores, tratti dalle classi
cittadine più distinte, ed avevano inoltre proprj medici e chirurghi per
curarne l’esistenza e la prestanza, come farebbesi di polli che si
vengano nutricando per le delizie de’ banchetti. Tacito però non a
torto chiamò il ludo sagina gladiatoria [136], ingrassamento
gladiatorio. Nè meno celebri furono i ludi di Capua e di Ravenna; dal
primo eruppe Spartaco e sappiam com’egli fosse il capo della
rivoluzion servile: al secondo, di proprietà dello stato, appartiene il
Gladiatore che è il protagonista della bella tragedia dell’Halm,
tradotta dall’egregio prof. dott. Giuseppe Rota, d’alcun brano della
quale, a chiarimento del mio soggetto, infiorerò tra poco queste
pagine.
Quale si avessero origine i Gladiatori, esporrò sotto brevità.
I funerali e la religione li produssero. Gli Etruschi gli usarono ne’
funerali, essendo loro credenza che l’anime de’ morti coll’uman
sangue si propiziassero. Epperò i captivi di guerra, gli schiavi tristi e
colpevoli, comperati, si immolavano nelle funebri pompe. Dagli
Etruschi venne il costume a’ Romani, prima però che a questi, passò
con determinate modificazioni ne’ riti, a’ popoli della Campania.
Fu nell’anno 490 della fondazione di Roma, che Marco e Decimo
Bruto offersero pubblicamente in Roma nel Foro Boario spettacolo di
gladiatori, in occasione della morte di Giunio, loro padre: i tre figli di
Emilio Lepido, augure, ne fecero lottare undici coppie nel foro per tre
giorni, poi venticinque i figliuoli di Valerio Levino; indi crebbero
vieppiù. Già vedemmo di Lucio Silla, come i ludi gladiatorii ordinasse
per testamento nelle sue esequie. Cesare, in memoria della figlia, ne
presentò seicentoquaranta; Tito, delizia del genere umano, continuò
tali conflitti per cento giorni; il buon Trajano, l’amico di Plinio, per
centoventitrè, offerendo duemila combattenti.
Nè fu più ragione il funerale o la religione soltanto a siffatti spettacoli;
ma i gladiatori si diedero ben anco a semplice titolo di divertimento,
e i magistrati primarj entrando in carica, a ingrazianarsi il popolo,
glieli offrivano a spettacolo; onde perfino tale divertimento stesso
gladiatorio si appellasse munus, sia che intender si volesse dato
gratuitamente, sia perchè dato per l’officio.
È fatto menzione da Svetonio, nella vita di Claudio, come questo
Cesare, prima di disseccare il lago Fùcino, vi volesse dare uno
spettacolo di naumachia, e che i gladiatori che vi dovevano
combattere, passando prima d’innanzi all’imperatore gridando: Ave,
Imperator, morituri te salutant: — Salve, o Imperatore, que’ che
vanno a morire ti salutano, — Claudio lor rispondesse: Avete vos, —
state sani; ond’essi, il saluto interpretando come un perdono e una
dispensa dal battersi, più non volessero infatti pugnare; tal che
Claudio, indegnato, rimanesse in forse se farli tutti perire di ferro e di
fuoco; ma poi lanciandosi dal suo seggio e girando intorno il lago
d’un passo tremante e ridicolo, un po’ con minacce, un po’ con
promesse, li obbligasse a combattere.
Era dunque una vera frenesia per codesti giuochi e così fu spinta,
che tali combattimenti diventarono presto un mestiere, e il popolo
sovrano a pagarli e fin le dame a carezzarne i campioni.
Or chi erano questi sciagurati che mettevano a prezzo il loro sangue,
la loro vita?
Due specie vi avevano di gladiatori: la prima di coloro che venivano
astretti ad assumere siffatto mestiere; l’altra di coloro che
volontariamente lo esercitavano. Venivano essi, cioè, della prima
specie, trascelti fra diverse classi della società, o erano schiavi che a
tal uopo vendevansi o prigionieri di guerra, che dopo aver servito a
decorare i trionfi de’ comandanti vittoriosi, riservavansi ai pubblici
giuochi; o finalmente colpevoli di crimini o condannati per causa di
ribellione.
Tuttavia accadde, — ed ecco come avvenisse che vi fossero atleti
della seconda specie, — che si vedessero scendere ne’ circhi a
combattere co’ gladiatori anche liberi cittadini, sia che fossero spinti
a così degradarsi dall’ingordigia del danaro, ed appellavansi
auctorati, sia che fossero mossi da una stolta ambizione.
La degradazione era necessaria conseguenza della professione da
chiunque venisse essa abbracciata; perocchè, comunque liberi,
questi auctorati erano tenuti ad un solenne giuramento, che ben
valeva una verace schiavitù. La formula di tal giuramento si può
leggere nei frammenti di Petronio Arbitro: In verba juravimus, uri,
vinciri, verberari, ferroque necari, et quidquid aliud Eumolpus
jussisset: tanquam legitimi gladiatores, domino corpora animosque
religiosissime addicimus [137]. Essere uccisi dal ferro, cioè, quando
cadevano vinti che dovevano allora sommettersi all’ultimo e mortale
colpo del vincitore; abbruciati o flagellati, quando avessero
timidamente pugnato o si fossero vilmente sottratti al ferro. A questo
fine nell’arena e sulla scena erano sempre i Lorarii, o Mastigofori
altramente detti, schiavi destinati ad infliggere loro le summentovate
pene.
Erano inoltre diverse le classi de’ gladiatori. V’erano i secutores,
inseguitori addestrati a combattere coi retiarii, prendendo il nome dal
modo onde inseguivano l’avversario, che avendo tentato di gittar su
di essi la sua rete, senza esservi riuscito, era costretto fuggire,
finchè gli fosse dato di ricuperar la rete, di cui si valeva. Così
sappiamo de’ retiarii, altri gladiatori che, oltre la rete colla quale
cercavano avvolgere i secutores, erano pure armati d’un forcone a
tre rebbi, tridentes. — Myrmillones chiamavansi que’ gladiatori che
ponevansi a pugnare contro i retiarii o contro i Traci, thraces,
gladiatori pur questi armati di coltello con arma ricurva, come
Spartaco che vuolsi appunto nativo di Tracia, che combattevano alla
foggia del loro paese. I Myrmillones portavano l’elmetto gallico con
l’immagine d’un pesce per cresta. In una tomba presso la porta
Ercolano in Pompei si trovò scolpita una figura di essi. Giovenale
così delle prime tre sorta di gladiatori fa cenno, staffilando i nobili
degenerati del suo tempo, che spudoratamente a questo infame
mestiere si erano dati.
. . . hæc ultra quid erit nisi ludus? Et illud

Dedecus Urbis habes: nec mirmillonis in armis
Nec clypeo Gracchum pugnantem, aut falce supina
(Damnat enim tales habitus; sed damnat et odit):
Nec galea frontem abscondit: movet ecce tridentem,
Postquam librata pendentia retia dextra
Nequidquam effudit, nudum ad spectacula vultum
Erigit et tota fugit agnoscendus arena.
Credamus tunicæ, de faucibus aurea quum se
Porrigat, et longo jactetur spira Galero.
Ergo ignominiam graviorem pertulit omni
Vulnere, cum Graccho jussus pugnare secutor [138].
Gli scavi di Pompei offersero del pari, in un basso rilievo in istucco

su d’una tomba, la figura d’un’altra specie di gladiatori, detti
Samnites, la cui origine ci è svelata da Tito Livio in quel passo cui
già accennai nel capitolo della Storia: Campani odio Samnitium
gladiatores eo ornatu armarunt, samniticumque nomina
appellarunt [139].
Questi Sanniti credesi anche si chiamassero col nome di
hoplomachi, se pure non fossero designati con questo nome altri
differenti atleti: ed erano essi gladiatori codesti che pugnavano
armati da capo a’ piedi.
Essedarii dicevansi coloro che combattevano dall’essedo, veicolo da
me già spiegato nel capitolo Le Vie; Andabati quelli che battevansi
sui cavalli; Dimachœri che usavano di due gladii, o spade; Laquearii
che cercavano abbattere il proprio competitore col laccio; Supposititii
o surrogati, che subentravano al gladiator vinto, misurandosi col
vincitore per contendergli la definitiva vittoria; Pegmares quelli che
servivano nell’anfiteatro a subitanee trasformazioni, da pegma
ch’erano appunto macchinismi scenici; Postulatitii coloro ch’erano
dati nello spettacolo in soprappiù del numero regolare indicato
nell’annuncio, a fine di soddisfare la richiesta (postulata) del publico;
e Meridiani, finalmente, certi gladiatori armati alla leggiera, che
combattevano per modo d’interludio, a mezzo giorno, dopo terminati
i combattimenti colle fiere.
Nè certo ho con questi menzionati i nomi tutti delle tante specie di
gladiatori, che nella frenesia di que’ spettacoli si vennero
studiosamente immaginando.
Più tardi adunque, come già ci avvertirono i succitati versi di
Giovenale, superando ogni ritegno e pregiudizio, scesero nell’arena
cavalieri perfino e senatori. Come s’è veduto avvenire che uomini
dell’ordine equestre montassero la scena sotto di Giulio Cesare; fu
pur sotto di esso che in Roma primi obliassero il decoro del loro
ordine Furio Leptino e Aulo Caleno, senatori; ma rotto il freno e
precipitando ognor più la pubblica moralità in basso, si vedevano
offerirsi a indecente e brutto spettacolo di nudità e di degradazione
nel circo nani e pigmei, donne e fra queste anche matrone.
Il perchè Giovenale così flagella l’inverecondo costume:
Endromidas Tyrias et femineum ceroma

Quis nescit? vel quis non vidit vulnera pali?
Quem cavat assiduis sudibus scutoque lacessit,
Atque omnes implet numeros, dignissima prorsus
Florali matrona tuba; nisi si quid in illo
Pectore plus agitat, veræque paratur arenæ.
Quem præstare potest mulier galeata pudorem
Quæ fugit a sexu? Vires amat [140].
Pare, ed a ragione, così di troppo conculcata la dignità umana; ma

che si dirà dinanzi il fatto di Nerone che fe’ pugnare in un giorno
nell’Anfiteatro 40 senatori e 60 cavalieri? Dopo l’umiliazion della
donna, succedeva quella dell’autorità. Che rimaneva omai di
venerando e sacro?
Quelli nondimeno che fra tutti costoro destavano maggior pietà,
erano indubbiamente i prigionieri di guerra, ai quali Tertulliano
concede l’epiteto d’innocenti, per distinguerli da’ gladiatori di
mestiere.
Nessuna guerra, dice Giusto Lipsio, non fu giammai più distruttiva
pel genere umano quanto i giuochi del circo. Infatti si sa da Plinio il

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Understanding Financial Accounting

Canadian 2nd Edition Burnley Test

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Bloom’s: AP = Application C = Comprehension K = Knowledge

SUMMARY OF QUESTION TYPES BY LEARNING OBJECTIVE,

Bloom’s: AP = Application C = Comprehension K = Knowledge

SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE

Note: TF = True-False Ex = Exercise SAE = Short-Answer Essay

CHAPTER LEARNING OBJECTIVES

1. Explain why cash and accounts receivable are of significance to users.

2. Describe the valuation methods for cash.

3. Explain the main principles of internal control and their limitations.

6. Describe the valuation methods for accounts receivable.

7. Explain the allowance method of accounting for bad debts.

1. The definition of cash only includes currency and bank accounts.

2. Cash and accounts receivable are a company’s least liquid assets.

5. A treasury bill is an example of a long-term investment.

11. Independent verification can be done internally or externally.

18. An accounts receivable is usually evidenced by a formal promissory note.

19. Selling on account reduces overall sales.

25. Allowance for doubtful accounts is a contra-liability account.

35. Bad Debt Expense is a permanent account.

47. Selling to customers on account reduces the cash-to-cash cycle.

ANSWERS TO TRUE-FALSE STATEMENTS

MULTIPLE CHOICE QUESTIONS

59. The effectiveness of internal control is limited by

60. Opportunities for employee fraud arise when

62. All of the following are examples of physical controls except

63. Separation of duties means

66. Who should be responsible for preparing the bank reconciliation?

fraudulent cash transactions is

69. Bank reconciliations are not

72. Which of the following statements is incorrect?

73. When selling on account, companies incur costs such as

74. A company can mitigate bad debt expense by

79. Which of the following is a contra account?

86. The Allowance for Doubtful Accounts

c) is part of ensuring faithful representation.

Use the following information for questions 87–88.

87. The bad debt expense for 2020 was

Use the following information for questions 89–90.

89. The bad debt expense for 2020 is

91. The statement of financial position method is also known as

93. If a company is experiencing more writeoffs than were estimated,

94. The most common threshold for account receivable groupings is

b) the percentage receivables method.

101. No allowance for doubtful accounts is used for the

Use the following information for questions 108–111.

Current Liabilities $1,400,000 $1,225,000

Net Credit Sales $2,400,000 $2,255,000

Orville Enterprise’s credit terms are net 30 days.