ACC 301: Chapter 6 (theory)

Frage 1 von 45

1

Which of the following items may be confused with cash but is normally categorized under a different balance sheet caption (not categorized as cash)?

Wähle eine der folgenden:

Foreign currency on deposit in a foreign bank.
Un-deposited credit card sales receipts.
Postdated checks.
Negotiable checks.

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Frage 2 von 45

1

The definition of cash equivalents includes:

I. available to pay current obligations
II. short-term, highly liquid investments

III. so near maturity that there is little risk of changes in value because of changes in interest rates

Wähle eine der folgenden:

I and II.
II and III.
I, II, and III.
I and III.

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Frage 3 von 45

1

Which of the following is an important element of internal control over cash?

Wähle eine der folgenden:

They are required for all companies.
They include a petty cash system.
They guarantee that a company's financial reports are reliable.
All of the choices are correct regarding internal controls.

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Frage 4 von 45

1

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Non-trade receivables include ( deposits with utilities, notes receivable, accounts receivable ) while trade receivables include ( accounts receivable, advances to employees, loans made by nonfinancial companies ).

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Frage 5 von 45

1

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Revenue recognition criteria include ( realization must have occurred, readily available for general use ) and ( must be earned, not bound by any restrictions ) which result in revenue generally being recognized when ( the product or service is delivered, all defective items have been returned ).

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Frage 6 von 45

1

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Cash (sales) discounts ( induce prompt payment, are price reductions for large purchases, hide real prices from competitors ) and are recorded using either the gross price method or the net price method.

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Frage 7 von 45

1

When a company records accounts receivable using the gross price method and the customer pays and takes advantage of the discount, which of the following is true?

Wähle eine der folgenden:

The company records accounts receivable and sales at the net invoice price and no further adjustment is required.
No adjustment is needed because the amount of cash received is equal to the recorded amount of the receivable.
The company credits an account entitled Sales Discounts Not Taken.
The difference between the cash received and the original amount of accounts receivable is recorded as a debit to Sales Discounts Taken.

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Frage 8 von 45

1

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A ( sales allowance, cash discount, sales return ) occurs when a customer retains defective goods; conceptually, the company should estimate and record in the period of sale so as to properly report sales revenue and ending accounts receivable.

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Frage 9 von 45

1

Which of the following statements is correct with regard to the direct write-off method?

I. Allows the manipulation of income.
II. Is simple to apply.

Wähle eine der folgenden:

I only.
II only.
I and II
Neither I nor II

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Frage 10 von 45

1

Wähle von der Aufklappliste, um den Text zu vervollständigen.

Using the ( % of outstanding accounts receivable, direct write-off, % of credit sales ) approach, a company considers the existing balance in the allowance account and records bad debt expense as the amount necessary to adjust the allowance to its desired balance.

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Frage 11 von 45

1

The net realizable value of a company's accounts receivable is the balance of the accounts receivable account

I. Plus the allowance for sales returns
II. Minus the allowance for doubtful accounts
III. Plus deferred gross profit
IV. Minus allowance for sales discounts

Wähle eine der folgenden:

I, II, and III
II and IV
II, III, and IV
I, II, III, and IV

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Frage 12 von 45

1

What method of bad debt estimation categorizes individual accounts receivable based on the length of time outstanding? Why is this length of time an important factor?

Wähle eine der folgenden:

Aging is based on the fact that credit risk tends to decrease with the age of the account receivable.
A company that "ages" its accounts receivable first classifies the individual accounts receivable based on the length of time they have been outstanding and then estimates the allowance for bad debts by applying appropriate bad debts percentages to each age category.
Aging is a relatively simple balance sheet approach which bases the estimated expense on the historical relationship between the actual bad debts and the outstanding accounts receivable balance at the end of the year.
All of the choices are correct regarding aging of accounts receivable.

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Frage 13 von 45

1

When accounts receivable are sold or factored

Wähle eine der folgenden:

the transaction is accounted for as a lending agreement.
the transferor records a gain or loss.
the creditor can require the amounts collected from the accounts receivable be used to repay the amount owed.
the proceeds from the transfer of financial assets are recorded as a liability.

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Frage 14 von 45

1

Accounts receivable are considered sold when

I. the transferred assets are put beyond the reach of the transferor.
II. the transferee has the right to sell the transferred assets.
III. the transferee has recourse against the transferor.
IV. the transferor does not maintain effective control over the transferred assets.

Wähle eine der folgenden:

I, II, III, and IV.
I, III, and IV.
I, II, and III.
I, II, and IV

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Frage 15 von 45

1

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Unlike accounts receivable, notes receivable ( are negotiable, arise from the company's operations ) and usually ( involve interest, are grouped as trade or nontrade in the ).

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Frage 16 von 45

1

Sally Company accepted a 3-month, non-interest-bearing note receivable on December 1. If Sally's year end is December 31, what entry would be recorded

Wähle eine der folgenden:

debit Cash and credit Interest Revenue.
debit Interest Expense and credit Cash.
debit Discount on Note Receivable and credit Interest Revenue.
debit Interest Expense and credit Discount on Note Receivable.

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Frage 17 von 45

1

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If a note is ( transferred with recourse, assigned ), the company reports a(n) ( liability, expense ) at the estimated amount it would have to pay the buyer.

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Frage 18 von 45

1

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When a note receivable is transferred, the cash proceeds equal the ( maturity value, present value ) of the note ( less, plus ) a discount. The discount is determined by multiplying the discount rate times the ( maturity value of the note, present value of the note, face value of the note less total intere ) for the discount period.

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Frage 19 von 45

1

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When financial assets are transferred, U.S. GAAP focuses on whether ( control has been surrendered, an accounting mismatch arises, the seller has transferred risk/rewards ) in determining whether the transfer is accounted for as a secured borrowing or a sale. Under IFRS, the derecognition of a financial asset is based on whether the seller has transferred substantially all the risks and rewards of ownership.

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Frage 20 von 45

1

Which of the following transactions would not be appropriate for the use of a petty cash system?

Wähle eine der folgenden:

Paying for postage.
Paying cab fare home for late-working employees.
Paying for NSF checks.
Paying for small amounts of office supplies.

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Frage 21 von 45

1

Why are actual expenses, rather than the petty cash account, debited when the fund is replenished?

Wähle eine der folgenden:

Because the entry records the expenses incurred for the period.
Because this process provides an external, independent control to verify a company's cash balance.
Because the petty cash fund is always carried in the company's accounting records at its current remaining balance.
All of the choices are correct regarding the petty cash account.

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Frage 22 von 45

1

Differences between the cash balance listed on a company's bank statement and the balance shown in the company's cash account include all of the following except:

Wähle eine der folgenden:

Outstanding checks.
Bank service charge expense.
Recourse liability expense.
Deposits in transit.

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Frage 23 von 45

1

Which of the following items appearing on a bank reconciliation would require the company to make an adjusting entry?

Wähle eine der folgenden:

Bank service charge.
Deposit in transit
Outstanding checks.
All of the choices would require an adjusting entry.

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Frage 24 von 45

1

Which of the following items should be classified under the heading of cash on the balance sheet?

Wähle eine oder mehr der folgenden:

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Frage 25 von 45

1

Greenfield Company had the following cash balances at December 31, 2016:

- Cash in banks: $1,300,000
- Petty cash funds (all funds were reimbursed on December 31, 2016): 20,000
- Cash legally restricted for additions to plant (expected to be disbursed in 2018): 2,000,000

Cash in banks includes $300,000 of compensating balances against short-term borrowing arrangements at December 31, 2016. The compensating balances are not legally restricted as to withdrawal by Greenfield.

In the current assets section of Greenfield's December 31, 2016, balance sheet, what total amount should be reported as cash?

Wähle eine der folgenden:

$3,020,000
$1,320,000
$3,320,000
$1,020,000

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Frage 26 von 45

1

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Cash on hand is ( included in, excluded from ) cash on the company's balance sheet.

Checking account is ( included in, excluded from ) cash on the company's balance sheet.

Sinking fund is ( excluded from, included in ) cash on the company's balance sheet.

Savings account is ( included in, excluded from ) cash on the company's balance sheet.

Certificates of deposit is ( excluded from, included in ) cash on the company's balance sheet.

Negotiable checks is ( included in, excluded from ) cash on the company's balance sheet.

Compensating balance is ( excluded from, included in ) cash on the company's balance sheet.

Travel advance is ( excluded from, included in ) cash on the company's balance sheet.

Deposits in a foreign bank is ( included in, excluded from ) cash on the company's balance sheet.

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Frage 27 von 45

1

Which of the following would not be included with cash and cash equivalents on the balance sheet?

Wähle eine der folgenden:

unrestricted funds on deposit.
checks.
sinking funds.
undeposited credit card sales receipts.

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Frage 28 von 45

1

A short-term investment is considered a cash equivalent if it is

Wähle eine der folgenden:

highly liquid.
readily convertible into an unknown amount of cash.
within 120 days of maturity.
all of these choices.

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Frage 29 von 45

1

Internal cash control procedures are

Wähle eine der folgenden:

required by law for publicly traded companies.
enhanced by routine reviews of the accuracy of recorded cash transactions.
enhanced by the separation of employee duties.
all of these choices.

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Frage 30 von 45

1

All of the following are a cash control over receipts except

Wähle eine der folgenden:

daily recording of all cash receipts in the accounting records.
daily deposit of all receipts in the company’s bank account.
immediate counting of receipts by the person opening the mail or the salesperson using the cash register, and subsequent verification by an independent person.
making all payments by check (or electronic funds transfer) so there is a record for every company expenditure.

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Frage 31 von 45

1

Which of the following would not be classified as a trade receivable?

Wähle eine der folgenden:

customer accounts receivable for the sale of merchandise on account.
short-term customer note receivable in exchange for merchandise.
accrued interest on investments.
obligations arising from customers for services rendered.

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Frage 32 von 45

1

Which of the following is treated as a cash sale?

Wähle eine der folgenden:

credit card sale involving a bank credit card.
credit card sale involving the store's credit card.
sale involving the receipt of a note receivable.
all of these choices.

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Frage 33 von 45

1

When a customer retains defective goods at a reduced price, the reduction is called a

Wähle eine der folgenden:

sales discount.
sales return.
sales allowance.
trade discount.

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Frage 34 von 45

1

Using the net price method, which account does not apply when recording the receipt of payment on account after the discount period?

Wähle eine der folgenden:

Accounts Receivable.
Cash.
Sales Discounts Not Taken.
Sales Revenue.

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Frage 35 von 45

1

Using the gross price method, the journal entry for a sale on account for $10,000 under the terms 2/10, n/30 would include a

Wähle eine der folgenden:

debit to Cash for $9,800.
debit to Accounts Receivable for $10,000.
debit to Accounts Receivable for $9,800.
debit to Sales Revenue for $9,800.

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Frage 36 von 45

1

Which of the following is not true of the account Allowance for Doubtful Accounts?

Wähle eine der folgenden:

It is an expense account.
It is reported on the balance sheet.
It is debited when writing off an uncollectible account receivable.
Its balance is deducted from the balance in Accounts Receivable to determine the net realizable value of the company’s receivables.

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Frage 37 von 45

1

Using the allowance method, which is the proper journal entry for writing off an uncollectible account?

Wähle eine der folgenden:

Debit Bad Debt Expense; credit Accounts Receivable.
Debit Bad Debt Expense; credit Allowance for Doubtful Accounts.
Debit Allowance for Doubtful Accounts; credit Accounts Receivable.
Debit Accounts Receivable; credit Allowance for Doubtful Accounts.

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Frage 38 von 45

1

Which of the following is not true of the direct write-off method?

Wähle eine der folgenden:

It is the preferred method under GAAP.
Bad debt expense is recorded only when a specific customer account is determined uncollectible.
It matches bad debts of previous sales against current sales.
An uncollectible account is written off by debiting Bad Debt Expense and crediting Accounts Receivable.

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Frage 39 von 45

1

If the transfer of receivables does not meet the conditions of a sale, it should be accounted for as

Wähle eine der folgenden:

secured borrowing.
factoring.
a securitization.
a sale with recourse.

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Frage 40 von 45

1

If Gable Company sells $50,000 of its accounts receivable to a factor without recourse, receiving 90% value and paying a 10% commission, the journal entry will include

Wähle eine der folgenden:

a debit to Cash for $40,000.
a debit to Receivable from Factor for $5,000.
a debit to Factoring Expense for $5,000.
all of these

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Frage 41 von 45

1

A retailer made $2,000 of bank credit card sales and is charged a 4% fee when depositing the receipts. Assuming it uses the gross price method of recording sales, the entry will include

Wähle eine der folgenden:

a debit to Cash for $2,000.
a credit to Sales Revenue for $1,920.
a debit to Credit Card Expense for $80.
none of these

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Frage 42 von 45

1

Which of the following are true of a note receivable?

Wähle eine der folgenden:

A note receivable gives the holder the right to collect money on demand.
A note receivable is not a negotiable instrument.
A note receivable usually does not involve interest.
None of these choices are true of a note receivable

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Frage 43 von 45

1

The journal entry for the collection of a $10,000, 90-day, 10% note receivable would include

Wähle eine der folgenden:

a debit to Cash for $10,000.
a credit to Notes Receivable for $9,750.
a credit to Interest Revenue for $250.
a debit to Interest Expense for $250.

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Frage 44 von 45

1

A petty cash fund is established for $300. At the end of the accounting period, there is $50 cash and $245 in petty cash vouchers. The journal entry to replenish the fund will include

Wähle eine der folgenden:

a debit to Petty Cash for $250.
a credit to Cash for $250.
a debit to various expenses for $245.
a credit to Cash Short and Over for $5.

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Frage 45 von 45

1

On a bank reconciliation, which of the following would be deducted from the bank statement balance?

Wähle eine der folgenden:

deposits in transit.
outstanding checks.
bank service charges.
a note collected by the bank.

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ACC 301: Chapter 6 (theory)

ACC 301: Chapter 6 (theory)

Frage 1 von 45

Which of the following items may be confused with cash but is normally categorized under a different balance sheet caption (not categorized as cash)?

Wähle eine der folgenden:

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Frage 2 von 45

The definition of cash equivalents includes: I. available to pay current obligations II. short-term, highly liquid investments III. so near maturity that there is little risk of changes in value because of changes in interest rates

Wähle eine der folgenden:

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Frage 3 von 45

Which of the following is an important element of internal control over cash?

Wähle eine der folgenden:

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Frage 4 von 45

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Frage 5 von 45

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Frage 6 von 45

Wähle von der Aufklappliste, um den Text zu vervollständigen.

Cash (sales) discounts induce prompt payment are price reductions for large purchases hide real prices from competitors( induce prompt payment, are price reductions for large purchases, hide real prices from competitors ) and are recorded using either the gross price method or the net price method.

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Frage 7 von 45

When a company records accounts receivable using the gross price method and the customer pays and takes advantage of the discount, which of the following is true?

Wähle eine der folgenden:

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Frage 8 von 45

Wähle von der Aufklappliste, um den Text zu vervollständigen.

A sales allowance cash discount sales return( sales allowance, cash discount, sales return ) occurs when a customer retains defective goods; conceptually, the company should estimate and record in the period of sale so as to properly report sales revenue and ending accounts receivable.

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Frage 9 von 45

Which of the following statements is correct with regard to the direct write-off method? I. Allows the manipulation of income. II. Is simple to apply.

Wähle eine der folgenden:

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Frage 10 von 45

Wähle von der Aufklappliste, um den Text zu vervollständigen.

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Frage 11 von 45

The net realizable value of a company's accounts receivable is the balance of the accounts receivable account I. Plus the allowance for sales returns II. Minus the allowance for doubtful accounts III. Plus deferred gross profit IV. Minus allowance for sales discounts

Wähle eine der folgenden:

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Frage 12 von 45

What method of bad debt estimation categorizes individual accounts receivable based on the length of time outstanding? Why is this length of time an important factor?

Wähle eine der folgenden:

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Frage 13 von 45

When accounts receivable are sold or factored

Wähle eine der folgenden:

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Frage 14 von 45

Wähle eine der folgenden:

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Frage 15 von 45

Wähle von der Dropdown-Liste, um den Text zu vervollständigen.

Unlike accounts receivable, notes receivable are negotiable arise from the company's operations( are negotiable, arise from the company's operations ) and usually involve interest are grouped as trade or nontrade in the( involve interest, are grouped as trade or nontrade in the ).

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Frage 16 von 45

Sally Company accepted a 3-month, non-interest-bearing note receivable on December 1. If Sally's year end is December 31, what entry would be recorded

Wähle eine der folgenden:

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Frage 17 von 45

Wähle von der Dropdown-Liste, um den Text zu vervollständigen.

If a note is transferred with recourse assigned( transferred with recourse, assigned ), the company reports a(n) liability expense( liability, expense ) at the estimated amount it would have to pay the buyer.

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Frage 18 von 45

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Frage 19 von 45

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Frage 20 von 45

Which of the following transactions would not be appropriate for the use of a petty cash system?

Wähle eine der folgenden:

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Frage 21 von 45

Why are actual expenses, rather than the petty cash account, debited when the fund is replenished?

Wähle eine der folgenden:

The definition of cash equivalents includes:

I. available to pay current obligations
II. short-term, highly liquid investments

III. so near maturity that there is little risk of changes in value because of changes in interest rates

Cash (sales) discounts ( induce prompt payment, are price reductions for large purchases, hide real prices from competitors ) and are recorded using either the gross price method or the net price method.

A ( sales allowance, cash discount, sales return ) occurs when a customer retains defective goods; conceptually, the company should estimate and record in the period of sale so as to properly report sales revenue and ending accounts receivable.

Which of the following statements is correct with regard to the direct write-off method?

I. Allows the manipulation of income.
II. Is simple to apply.

The net realizable value of a company's accounts receivable is the balance of the accounts receivable account

I. Plus the allowance for sales returns
II. Minus the allowance for doubtful accounts
III. Plus deferred gross profit
IV. Minus allowance for sales discounts

Unlike accounts receivable, notes receivable ( are negotiable, arise from the company's operations ) and usually ( involve interest, are grouped as trade or nontrade in the ).

If a note is ( transferred with recourse, assigned ), the company reports a(n) ( liability, expense ) at the estimated amount it would have to pay the buyer.