Exam 9: Short-Term Operating Assets: Cash and Receivables

How can accounting for bad debts be used for earnings management?

The cash operating cycle can be computed as ________.

If a company employs the gross method of recording accounts receivable from customers, then sales discounts taken should be reported as ________.

Accounts receivable turnover measures ________.

Which method of estimating bad debt expense focuses on balance sheet relationships?

On January 1, 2018, Willett Company's account balances for Accounts Receivable and the related Allowance for Uncollectible Accounts were $3,600,000 and $90,000, respectively. During the year, sales revenue totaled $40 million, of which 70% were credit sales and the remainder were cash sales. Altogether, cash collections from all customers amounted to $30 million. Also, write-offs of accounts deemed to be uncollectible totaled $250,000. At the end of the year, an analysis of aged accounts receivable indicated that 2% of total gross receivables may be uncollectible. Required: Determine the amount of bad debt expense for the year and net realizable value of receivables at the end of the year.

Which of the following requires that publicly traded U.S. companies maintain an effective system of internal controls?

Which of the following is a reduction of a catalog price whenever a company sells to a reseller in the same industry?

How do accounting standards for bank overdrafts differ under U.S. GAAP and IFRS?

Finney Fabrics frequently factors its accounts receivable. On March 15, 2018, Finney sold without recourse $400,000 of these receivables to a factor. The factoring qualifies as a sale. The factor assessed a finance charge of 5% on the gross amount of the factored receivables and held back an additional 4% as security On June 10, the factor returned the full balance owed to Finney. Prepare Finney's journal entry to record a. the sale of the receivables on March 15, 2018; b. the receipt of cash on June 10, 2018.

Cash equivalents are short-term, highly liquid investments with original maturities of one year or less.

ABC Inc. makes a sale to a customer for $10,000 with terms 3/15, n45. ABC Inc. uses the gross method. The customer pays ABC 12 days after the date of the invoice. What journal entry would ABC make upon receiving the payment?

When does a company record the transfer of accounts receivable as a sale? As a secured borrowing (a liability)? Use U.S. GAAP.

A company writes off an account receivable when it no longer expects to collect the amount due from the customer.

Under the net method of recording accounts receivable, a company assumes that the customer will take the sales discount.

Cardboard Cutouts Inc. (CCI) sold $7,000 of products to a customer on account to a customer with terms of 2/10, n/30. CCI uses the expected-value method to record its credit sales and management assumes that it is 40% likely that the customer will not take the discount. (Ignore the journal entry that would typically be necessary to record the cost of goods sold and the reduction of inventory.) Record the journal entry to recognize the sale.

Which of the following could be described as follows? A comparison of the company bank statement balance to the balance in the company's general ledger cash account and a determination as to why differences between the company's books and the bank statement balance exists.

Which ratio indicates the effectiveness of a company's credit extension policy?

In performing a bank reconciliation, a clerk notices that a check sent to the bank for deposit at month end had not been recorded before the bank statement was prepared. In completing the bank reconciliation, the clerk should identify the amount of the check as ________.

Eurobake Inc. made a $50,000 sale on account with terms of 1/15, n/30. If the company uses the net method, which of the following will be included in the journal entry to record the sale on account?