ACC 301: Chapter 6 (theory)

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

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

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

Non-trade receivables include [blank_start]deposits with utilities[blank_end] while trade receivables include [blank_start]accounts receivable[blank_end].

Revenue recognition criteria include [blank_start]realization must have occurred[blank_end] and [blank_start]must be earned[blank_end] which result in revenue generally being recognized when [blank_start]the product or service is delivered[blank_end].

Cash (sales) discounts [blank_start]induce prompt payment[blank_end] and are recorded using either the gross price method or the net price method.

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?

A [blank_start]sales allowance[blank_end] 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.

Using the [blank_start]% of outstanding accounts receivable[blank_end] 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.

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

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?

When accounts receivable are sold or factored

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.

Unlike accounts receivable, notes receivable [blank_start]are negotiable[blank_end] and usually [blank_start]involve interest[blank_end].

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

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

When a note receivable is transferred, the cash proceeds equal the [blank_start]maturity value[blank_end] of the note [blank_start]less[blank_end] a discount. The discount is determined by multiplying the discount rate times the [blank_start]maturity value of the note[blank_end] for the discount period.

When financial assets are transferred, U.S. GAAP focuses on whether [blank_start]control has been surrendered[blank_end] 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.

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

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

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:

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

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

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?

Cash on hand is [blank_start]included in[blank_end] cash on the company's balance sheet. Checking account is [blank_start]included in[blank_end] cash on the company's balance sheet. Sinking fund is [blank_start]excluded from[blank_end] cash on the company's balance sheet. Savings account is [blank_start]included in[blank_end] cash on the company's balance sheet. Certificates of deposit is [blank_start]excluded from[blank_end] cash on the company's balance sheet. Negotiable checks is [blank_start]included in[blank_end] cash on the company's balance sheet. Compensating balance is [blank_start]excluded from[blank_end] cash on the company's balance sheet. Travel advance is [blank_start]excluded from[blank_end] cash on the company's balance sheet. Deposits in a foreign bank is [blank_start]included in[blank_end] cash on the company's balance sheet.

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

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

Internal cash control procedures are

All of the following are a cash control over receipts except

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

Which of the following is treated as a cash sale?

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

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

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

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

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

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

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

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

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

Which of the following are true of a note receivable?

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

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

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