Question 1

In which of the following situations are a company's receivables sold to another entity?

Accepted Answer

A) recoursing 
B) assigning 
C) factoring 
D) pledging 
A) recoursing 
B) assigning 
C) factoring 
D) pledging

Question 2

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

Accepted Answer

A) inventory turnover 
B) accounts payable turnover 
C) days sales outstanding 
D) days inventory on hand 
A) inventory turnover 
B) accounts payable turnover 
C) days sales outstanding 
D) days inventory on hand

Question 3

Accounts receivable turnover measures ________.

Accepted Answer

A) how long it takes to sell merchandise 
B) the relationship between credit sales and cash sales 
C) the length of time it takes a company to generate cash from its operations 
D) how many times average receivables are collected during the year 
A) how long it takes to sell merchandise 
B) the relationship between credit sales and cash sales 
C) the length of time it takes a company to generate cash from its operations 
D) how many times average receivables are collected during the year

Question 4

Factored receivables sold without recourse are classified as a liability.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) sales discounts forfeited on the income statement 
B) an item of "other income and expense" on the income statement 
C) an increase to sales revenue on the income statement 
D) a deduction from sales revenue on the income statement 
A) sales discounts forfeited on the income statement 
B) an item of "other income and expense" on the income statement 
C) an increase to sales revenue on the income statement 
D) a deduction from sales revenue on the income statement

Question 6

What is the balance sheet classification of a bank account whose fund balance is restricted for retirement of bonds that mature in six years?

Accepted Answer

A) current asset 
B) non-current asset 
C) current liability 
D) non-current liability 
A) current asset 
B) non-current asset 
C) current liability 
D) non-current liability

Question 7

The Note Receivable account is always debited for the face value of a note.

Accepted Answer

A) True 
 B)False

Question 8

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) negative cash balance that occurs when a company writes a check in an amount that exceeds the account balance 
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) negative cash balance that occurs when a company writes a check in an amount that exceeds the account balance 
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 9

What is the company's accounts payable turnover ratio?

Accepted Answer

A) 36.5 
B) 25.0 
C) 14.6 
D) 10.0 
A) 36.5 
B) 25.0 
C) 14.6 
D) 10.0

Question 10

The length of time it takes a company to generate cash from its operations is called the ________.

Accepted Answer

A) operating cycle 
B) cash cycle 
C) financing cycle 
D) receivable cycle 
A) operating cycle 
B) cash cycle 
C) financing cycle 
D) receivable cycle

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Vladulac Corporation began 2017 with accounts receivable of $180,000 and an allowance for uncollectible accounts of $13,000 (credit balance).Bad debt expense for the year was $25,000 and the ending balance in the allowance for uncollectible accounts account was $16,000.The accounts receivable turnover ratio for 2017 was 10.0.NOTE: This ratio was calculated using the average of gross accounts receivable in the denominator (that is,[$180,000 + year-end accounts receivable] divided by 2).
The following additional information is also available:
   Required:
a.What was the amount of accounts receivable written off during the year?
b.What was the amount of cash collected from customers during the year? Assume that all sales are made on a credit basis and that there were no collections of previously written off receivables or sales returns.

Accepted Answer

a.
 $13,000 (beginning allowance)+ 25,00

Question 13

Why are trade discounts not recorded in the accounts like sales discounts?

Accepted Answer

Trade discounts are not recorded in the

Question 14

Electroid borrowed $85,000 cash from TechCo by signing a promissory note.TechCo's entry to record the transaction should include a ________.

Accepted Answer

A) debit Accounts Receivable for $85,000 
B) credit Accounts Receivable for $85,000 
C) debit Note Receivable for $85,000 
D) credit Note Receivable for $85,000 
A) debit Accounts Receivable for $85,000 
B) credit Accounts Receivable for $85,000 
C) debit Note Receivable for $85,000 
D) credit Note Receivable for $85,000

Question 15

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

Accepted Answer

A) changing the percentage of aged receivables that comprise the allowance balance 
B) using the percentage-of-sales method to determine bad debt expense 
C) determining which accounts to write-off 
D) reversing previous write-offs 
A) changing the percentage of aged receivables that comprise the allowance balance 
B) using the percentage-of-sales method to determine bad debt expense 
C) determining which accounts to write-off 
D) reversing previous write-offs

Question 16

The cash operating cycle can be computed as ________.

Accepted Answer

A) days accounts payable outstanding + days sales outstanding + days inventory on hand 
B) days accounts payable outstanding - days sales outstanding - days inventory on hand 
C) days accounts payable outstanding + days sales outstanding - days inventory on hand 
D) days accounts payable outstanding - days sales outstanding + days inventory on hand 
A) days accounts payable outstanding + days sales outstanding + days inventory on hand 
B) days accounts payable outstanding - days sales outstanding - days inventory on hand 
C) days accounts payable outstanding + days sales outstanding - days inventory on hand 
D) days accounts payable outstanding - days sales outstanding + days inventory on hand

Question 17

Discounting a note receivable is similar to pledging an account receivable.

Accepted Answer

A) True 
 B)False

Question 18

The operating cycle is the length of time from when a product is sold until the cash is collected.

Accepted Answer

A) True 
 B)False

Question 19

Finney Fabrics frequently factors its accounts receivable.On March 15,2016,Finney sold without recourse $400,000 of these receivables to a factor.The factoring agreement requires Finney to be responsible for any sales returns and cash discounts taken by customers upon payment of the factored receivables.The factor assessed a finance charge of 5% on the gross amount of the factored receivables and held back an additional 4% to cover sales discounts,returns,and allowances.During 2016,customers returned merchandise associated with those receivables with a gross value of $5,000.The factor collected the remaining amount of the factored receivables,minus the 2% discount on 94% of the collected receivables.On June 10,the factor returned the balance owed to Finney.
Prepare Finney's journal entry to record
a.the sale of the receivables on March 15,2016;
b.the receipt of cash on June 10,2016.

Accepted Answer

@#IMG-DLM& 
 To record credit

Question 20

Danzig Inc.factors $2,000,000 of its accounts receivables without recourse for a finance charge of 5%.The finance company retains an amount equal to 10% of the accounts receivable for possible adjustments.What would be recorded by Danzig as a gain (loss)on the transfer of receivables?

Accepted Answer

A) gain of $100,000 
B) loss of $100,000 
C) loss of $200,000 
D) loss of $300,000 
A) gain of $100,000 
B) loss of $100,000 
C) loss of $200,000 
D) loss of $300,000

In which of the following situations are a company's receivables sold to another entity?

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

Accounts receivable turnover measures ________.

Factored receivables sold without recourse are classified as a liability.

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

What is the balance sheet classification of a bank account whose fund balance is restricted for retirement of bonds that mature in six years?

The Note Receivable account is always debited for the face value of a note.

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

What is the company's accounts payable turnover ratio?

The length of time it takes a company to generate cash from its operations is called the ________.

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

Why are trade discounts not recorded in the accounts like sales discounts?

Electroid borrowed $85,000 cash from TechCo by signing a promissory note.TechCo's entry to record the transaction should include a ________.

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

The cash operating cycle can be computed as ________.

Discounting a note receivable is similar to pledging an account receivable.

The operating cycle is the length of time from when a product is sold until the cash is collected.

Danzig Inc.factors $2,000,000 of its accounts receivables without recourse for a finance charge of 5%.The finance company retains an amount equal to 10% of the accounts receivable for possible adjustments.What would be recorded by Danzig as a gain (loss)on the transfer of receivables?

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

OL: Revenue Recognition

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

OL: Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

Filters

Exam 10: Short-Term Operating Assets: Cash and Receivables

In which of the following situations are a company's receivables sold to another entity?

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

Accounts receivable turnover measures ________.

Factored receivables sold without recourse are classified as a liability.

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

What is the balance sheet classification of a bank account whose fund balance is restricted for retirement of bonds that mature in six years?

The Note Receivable account is always debited for the face value of a note.

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

What is the company's accounts payable turnover ratio?

The length of time it takes a company to generate cash from its operations is called the ________.

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

Why are trade discounts not recorded in the accounts like sales discounts?

Electroid borrowed $85,000 cash from TechCo by signing a promissory note.TechCo's entry to record the transaction should include a ________.

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

The cash operating cycle can be computed as ________.

Discounting a note receivable is similar to pledging an account receivable.

The operating cycle is the length of time from when a product is sold until the cash is collected.

Danzig Inc.factors $2,000,000 of its accounts receivables without recourse for a finance charge of 5%.The finance company retains an amount equal to 10% of the accounts receivable for possible adjustments.What would be recorded by Danzig as a gain (loss)on the transfer of receivables?

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

OL: Revenue Recognition

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

OL: Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

Filters