Question 1

Which of the following must be disclosed in the footnotes to the financial statements?

Accepted Answer

A)  reclassification of a cash amount that is restricted from use in the current operating cycle 
B)  bank overdraft listed as a current liability on the balance sheet 
C)  short-term liquid investment with original maturity of three months or less 
D)  minimum cash balance required to be maintained by a credit agreement 
A)  reclassification of a cash amount that is restricted from use in the current operating cycle 
B)  bank overdraft listed as a current liability on the balance sheet 
C)  short-term liquid investment with original maturity of three months or less 
D)  minimum cash balance required to be maintained by a credit agreement

Question 2

Wull Associates sold a piece of equipment to Coral Company on April 1, 2018, for $500,000. Wull agreed to accept a 9-month note with 8% interest (current market rate) due on its maturity date, December 31, 2018. Wull's journal entry to record the receipt of the note on April 1, 2018, will include a ________.

Accepted Answer

A)  credit to Cash for $500,000 
B)  debit to Cash for $500,000 
C)  credit to Note Receivable for $500,000 
D)  debit to Note Receivable for $500,000 
A)  credit to Cash for $500,000 
B)  debit to Cash for $500,000 
C)  credit to Note Receivable for $500,000 
D)  debit to Note Receivable for $500,000

Question 3

The following company information is available: $$\begin{array} { | l | r | } 
\hline \text { Average accounts receivable } & \$ 700,000 \
\hline \text { Average inventories } & 110,000 \
\hline \text { Average accounts payable } & 140,000 \
\hline \text { Net sales } & 3,000,000 \
\hline \text { Cost of goods sold } & 1,200,000 \
\hline \text { Purchases } & 1,120,000 \
\hline
\end{array}$$ 
What is the company's accounts receivable turnover ratio? (Assume all sales are made on credit.)

Accepted Answer

A)  0.0 
B)  85.1 
C)  4.3 
D)  1.7 
A)  0.0 
B)  85.1 
C)  4.3 
D)  1.7

Question 4

Lithotech, Inc. had net sales in 2018 of $800,000. At December 31, 2018, before adjusting entries, the balances in selected accounts were: accounts receivable $126,000 debit, and allowance for doubtful accounts $1,400 debit. Lithotech estimates that 1% of its receivables will prove to be uncollectible. What is the net realizable value of the receivables reported on the statement of financial position at December 31, 2018 after adjusting entries?

Accepted Answer

A)  $124,740 
B)  $126,140 
C)  $123,340 
D)  $126,000 
A)  $124,740 
B)  $126,140 
C)  $123,340 
D)  $126,000

Question 5

Recording bad debt expense during the period when an account is determined to be uncollectible, which is generally not allowed under U.S. GAAP, is known as the ________.

Accepted Answer

A)  allowance method 
B)  non-allowance method 
C)  direct write-off method 
D)  net write-off method 
A)  allowance method 
B)  non-allowance method 
C)  direct write-off method 
D)  net write-off method

Question 6

What factors are considered when estimating bad debt expense?

Accepted Answer

Estimates for uncollectible accounts are

Question 7

Bad debt expense represents the amount of receivables written off during the period.

Accepted Answer

A) True 
 B)False

Question 8

Under U.S. GAAP, which of the following would be included in the journal entry to record the sale of receivables to a factor without recourse?

Accepted Answer

A)  debit Accounts Receivable 
B)  debit Loss on Sale of Receivables 
C)  credit Cash 
D)  credit Receivable from Factor 
A)  debit Accounts Receivable 
B)  debit Loss on Sale of Receivables 
C)  credit Cash 
D)  credit Receivable from Factor

Question 9

On June 1, Homart Wholesalers, Inc. sells 2,000 cases of facial products for $8 per case with terms of 3/15, n/30. Homart uses the periodic inventory method.
a. If Homart uses the gross method, what is the journal entry to record the sale on June 1?
b. If Homart uses the gross method, what is the journal entry to record customer payment
on June 12?
c. If Homart uses the gross method, what is the journal entry to record customer payment
on June 30?
d. If Homart uses the net method, what is the journal entry to record the sale on June 1?
e. If Homart uses the net method, what is the journal entry to record customer payment
on June 12?
f. If Homart uses the net method, what is the journal entry to record customer payment on June 30

Accepted Answer

None

Question 10

Accounting standards require separate disclosure for cash and cash equivalents that are restricted from use in operations.

Accepted Answer

A) True 
 B)False

Question 11

Under the gross method of recording accounts receivable, a customer must pay the gross amount of the invoice.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is considered to be cash (not a cash equivalent)?

Accepted Answer

A)  treasury bill 
B)  money market fund 
C)  certificate of deposit 
D)  money order 
A)  treasury bill 
B)  money market fund 
C)  certificate of deposit 
D)  money order

Question 13

A compensating cash balance held as support of a credit agreement is not classified as cash on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 14

The allowance method is used to estimate not only the net realizable value of accounts receivable but also the current period's bad debt expense.

Accepted Answer

A) True 
 B)False

Which of the following must be disclosed in the footnotes to the financial statements?

Recording bad debt expense during the period when an account is determined to be uncollectible, which is generally not allowed under U.S. GAAP, is known as the ________.

What factors are considered when estimating bad debt expense?

Bad debt expense represents the amount of receivables written off during the period.

Under U.S. GAAP, which of the following would be included in the journal entry to record the sale of receivables to a factor without recourse?

Accounting standards require separate disclosure for cash and cash equivalents that are restricted from use in operations.

Under the gross method of recording accounts receivable, a customer must pay the gross amount of the invoice.

Which of the following is considered to be cash (not a cash equivalent)?

A compensating cash balance held as support of a credit agreement is not classified as cash on the balance sheet.

The allowance method is used to estimate not only the net realizable value of accounts receivable but also the current period's bad debt expense.

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

Extenssion: Ol Revenue Recognition Previous Standard

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, Cost Allocation

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Leases

Extension: Ol Accounting for Leases Current Standard

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

The Statement of Cash Flows

Filters

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

Which of the following must be disclosed in the footnotes to the financial statements?

Recording bad debt expense during the period when an account is determined to be uncollectible, which is generally not allowed under U.S. GAAP, is known as the ________.

What factors are considered when estimating bad debt expense?

Bad debt expense represents the amount of receivables written off during the period.

Under U.S. GAAP, which of the following would be included in the journal entry to record the sale of receivables to a factor without recourse?

Accounting standards require separate disclosure for cash and cash equivalents that are restricted from use in operations.

Under the gross method of recording accounts receivable, a customer must pay the gross amount of the invoice.

Which of the following is considered to be cash (not a cash equivalent)?

A compensating cash balance held as support of a credit agreement is not classified as cash on the balance sheet.

The allowance method is used to estimate not only the net realizable value of accounts receivable but also the current period's bad debt expense.

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

Extenssion: Ol Revenue Recognition Previous Standard

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, Cost Allocation

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Leases

Extension: Ol Accounting for Leases Current Standard

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

The Statement of Cash Flows

Filters