Question 1

On the December 31, 2010 balance sheet of Yager Co., the current receivables consisted of the following:  At December 31, 2010, the correct total of Yager's current net receivables was

Accepted Answer

A)  $78,000
B)  $74,500
C)  $70,500
D)  $66,500

Question 2

Assuming that the ideal measure of short-term receivables in the balance sheet is the discounted value of the cash to be received in the future, failure to follow this practice usually does not make the balance sheet misleading because

Accepted Answer

A)  most short-term receivables are not interest-bearing.
B)  the allowance for uncollectible accounts includes a discount element.
C)  the amount of the discount is not material.
D)  most receivables can be sold to a bank or factor.

Question 3

The direct write off method to accounting for the impairment of receivables

Accepted Answer

A)  Is never an acceptable method.
B)  Is an acceptable method when the effect of not applying the allowance method would be immaterial.
C)  Is specifically disallowed under private entity GAAP.
D)  Would usually result in the same net income as the allowance method.

Question 4

Which of the following methods of determining annual bad debts expense best achieves the matching concept?

Accepted Answer

A)  Percentage of sales
B)  Percentage of ending accounts receivable
C)  Percentage of average accounts receivable
D)  Direct write-off

Question 5

Securitization of assets usually involves

Accepted Answer

A)  sale to only one company.
B)  the seller does not continue to service the receivables.
C)  the receivables quality is low.
D)  many investors.

Question 6

Which of the following methods of estimating the impairment of receivables does not properly match expense and revenue?

Accepted Answer

A)  Charging bad debts with a percentage of sales under the allowance method.
B)  Charging bad debts with an amount derived from a percentage of accounts receivable under the allowance method.
C)  Charging bad debts with an amount derived from aging accounts receivable under the
D)  Charging bad debts as accounts are written off as uncollectible.

Question 7

Which of the following is a method to generate cash from accounts receivable?

Accepted Answer

The answer of Which of the following is a method...

Question 8

During the year, Bergh Company made an entry to write off a $4,000 uncollectible account.Before this entry was made, the balance in accounts receivable was $60,000 and the balance in the allowance account was $4,500.The net realizable value of accounts receivable after the write-off entry was

Accepted Answer

A)  $60,000.
B)  $59,500.
C)  $51,500.
D)  $55,500.

Question 9

When the stated rate and market rate of a note receivable are the same

Accepted Answer

A)  the note's face value would be different
B)  the note's face value would be indeterminable
C)  the note's face value and fair value would be the same
D)  None of these

Question 10

Use the following information for questions 
On February 1, 2010, Otto Company factored receivables with a carrying amount of $200,000 to Kassim Company.Kassim Company assesses a finance charge of three percent of the receivables and retains five percent of the receivables.Relative to this transaction, you are to determine the amount of loss on sale to be reported in the income statement of Otto Company for February.
-Assume that Otto factors the receivables on a recourse basis.The recourse obligation has a fair value of $1,000.The loss to be reported is

Accepted Answer

A)  $6,000.
B)  $7,000.
C)  $10,000.
D)  $17,000. B

Question 11

The advantage of relating a company's bad debt expense to its outstanding accounts receivable is that this approach

Accepted Answer

A)  gives a reasonably correct statement of receivables in the balance sheet.
B)  best relates bad debts expense to the period of sale.
C)  is the only generally accepted method for valuing accounts receivable.
D)  makes estimates of uncollectible accounts unnecessary.

Question 12

The category "trade receivables" includes

Accepted Answer

A)  advances to officers and employees.
B)  income tax refunds receivable.
C)  claims against insurance companies for casualties sustained.
D)  none of these.

Question 13

Receivables are claims held against customers for services, goods or money.The three classifications for receivables are:

Accepted Answer

A)  Trade or non-trade, current or non current, and accounts receivable or notes receivable
B)  Trade or non-trade, current or non current and trade discount
C)  Current or non current, accounts receivable or notes receivable and inventory
D)  Current or non current, trade or non-trade and allowance method

Question 14

The ratio that is used to assess the receivables liquidity is:

Accepted Answer

A)  Receivable turnover ratio
B)  Current Ratio
C)  Asset turnover
D)  Inventory turnover

Question 15

The following information is available for Sorensen Company:  As a result of a review and aging of accounts receivable in early January 2012, however, it has been determined that an allowance for doubtful accounts of $7,500 is needed at December 31, 2011.What amount should Sorensen record as bad debt expense for the year ended December 31, 2011?

Accepted Answer

A)  $6,500
B)  $7,500
C)  $8,500
D)  $15,500 B

Question 16

Receivables are usually analyzed in terms of

Accepted Answer

A)  their turnover
B)  their age
C)  their change relative to related accounts
D)  all of these D

Question 17

Moscowietz Co.'s allowance for doubtful accounts was $85,000 at the end of 2010 and $105,000 at the end of 2009.For the year ended December 31, 2010, Moscowietz reported bad debt expense of $18,000 in its income statement.What amount did
Moscowietz debit to the appropriate account in 2010 to write off actual bad debts?

Accepted Answer

A)  $20,000
B)  $34,650
C)  $38,000
D)  $12,000

Question 18

Solara, Ltd.had the following bank reconciliation at March 31, 2010:  All reconciling items at March 31, 2010 cleared the bank in April.Outstanding cheques at April 30, 2010 totalled $5,000.There were no deposits in transit at April 30, 2010.What is the cash balance per books at April 30, 2010?

Accepted Answer

A)  $30,200
B)  $32,900
C)  $35,200
D)  $40,500

Question 19

When preparing a bank reconciliation, bank credits are

Accepted Answer

A)  added to the bank statement balance.
B)  deducted from the bank statement balance.
C)  added to the balance per books.
D)  deducted from the balance per books.

Question 20

Travel advances should be reported as

Accepted Answer

A)  supplies.
B)  cash because they represent the equivalent of money.
C)  investments.
D)  none of these.

Exam 7: Cash and Receivables

On the December 31, 2010 balance sheet of Yager Co., the current receivables consisted of the following: At December 31, 2010, the correct total of Yager's current net receivables was

Correct Answer
verified

Assuming that the ideal measure of short-term receivables in the balance sheet is the discounted value of the cash to be received in the future, failure to follow this practice usually does not make the balance sheet misleading because

Correct Answer
verified

The direct write off method to accounting for the impairment of receivables

Correct Answer
verified

Which of the following methods of determining annual bad debts expense best achieves the matching concept?

Correct Answer
verified

Securitization of assets usually involves

Correct Answer
verified

Which of the following methods of estimating the impairment of receivables does not properly match expense and revenue?

Correct Answer
verified

Which of the following is a method to generate cash from accounts receivable?

Correct Answer
verified

During the year, Bergh Company made an entry to write off a $4,000 uncollectible account.Before this entry was made, the balance in accounts receivable was $60,000 and the balance in the allowance account was $4,500.The net realizable value of accounts receivable after the write-off entry was

Correct Answer
verified

When the stated rate and market rate of a note receivable are the same

Correct Answer
verified

Correct Answer
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B

The advantage of relating a company's bad debt expense to its outstanding accounts receivable is that this approach

Correct Answer
verified

The category "trade receivables" includes

Correct Answer
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Receivables are claims held against customers for services, goods or money.The three classifications for receivables are:

Correct Answer
verified

The ratio that is used to assess the receivables liquidity is:

Correct Answer
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Correct Answer
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B

Receivables are usually analyzed in terms of

Correct Answer
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D

Correct Answer
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Solara, Ltd.had the following bank reconciliation at March 31, 2010: All reconciling items at March 31, 2010 cleared the bank in April.Outstanding cheques at April 30, 2010 totalled $5,000.There were no deposits in transit at April 30, 2010.What is the cash balance per books at April 30, 2010?

Correct Answer
verified

When preparing a bank reconciliation, bank credits are

Correct Answer
verified

Travel advances should be reported as

Correct Answer
verified

Exam 7: Cash and Receivables

On the December 31, 2010 balance sheet of Yager Co., the current receivables consisted of the following: At December 31, 2010, the correct total of Yager's current net receivables was

Correct AnswerverifiedShow Answer

Assuming that the ideal measure of short-term receivables in the balance sheet is the discounted value of the cash to be received in the future, failure to follow this practice usually does not make the balance sheet misleading because

Correct AnswerverifiedShow Answer

The direct write off method to accounting for the impairment of receivables

Correct AnswerverifiedShow Answer

Which of the following methods of determining annual bad debts expense best achieves the matching concept?

Correct AnswerverifiedShow Answer

Securitization of assets usually involves

Correct AnswerverifiedShow Answer

Which of the following methods of estimating the impairment of receivables does not properly match expense and revenue?

Correct AnswerverifiedShow Answer

Which of the following is a method to generate cash from accounts receivable?

Correct AnswerverifiedShow Answer

During the year, Bergh Company made an entry to write off a $4,000 uncollectible account.Before this entry was made, the balance in accounts receivable was $60,000 and the balance in the allowance account was $4,500.The net realizable value of accounts receivable after the write-off entry was

Correct AnswerverifiedShow Answer

When the stated rate and market rate of a note receivable are the same

Correct AnswerverifiedShow Answer

Correct AnswerverifiedB

The advantage of relating a company's bad debt expense to its outstanding accounts receivable is that this approach

Correct AnswerverifiedShow Answer

The category "trade receivables" includes

Correct AnswerverifiedShow Answer

Receivables are claims held against customers for services, goods or money.The three classifications for receivables are:

Correct AnswerverifiedShow Answer

The ratio that is used to assess the receivables liquidity is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedB

Receivables are usually analyzed in terms of

Correct AnswerverifiedD

Correct AnswerverifiedShow Answer

Solara, Ltd.had the following bank reconciliation at March 31, 2010: All reconciling items at March 31, 2010 cleared the bank in April.Outstanding cheques at April 30, 2010 totalled $5,000.There were no deposits in transit at April 30, 2010.What is the cash balance per books at April 30, 2010?

Correct AnswerverifiedShow Answer

When preparing a bank reconciliation, bank credits are

Correct AnswerverifiedShow Answer

Travel advances should be reported as

Correct AnswerverifiedShow Answer

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B

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B

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D

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