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Exam 7: Cash and Receivables

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Question 41

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The materiality principle allows companies with low amounts of uncollectible accounts to use the direct write-off method.

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Question 42

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The simplest way to account for an uncollectible account is to use the allowance method.

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Question 43

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Cash on the Balance Sheet includes:

Which of the following would NOT be considered a cash equivalent?

Once an Account Receivable is written off, can a business ever collect that money?

The direct write-off method always adheres to the matching principle.

Ninety-day U.S. Treasury notes are considered cash equivalents.

The bank recorded a $49 deposit as $66. On a bank reconciliation this error would be corrected by:

Lionworks Company has cash of $145,000; net Accounts Receivable of $92,000; short-term investments of $35,000 and prepaid expenses of $44,000. It also has $40,000 in current liabilities and $73,000 in long-term liabilities. The current ratio for Lionworks Company is:

Interest is an expense to the debtor and income to the creditor.

A $575 collection on a note from a customer was reflected on Ronaldo Co's bank statement. When doing the bank reconciliation, Ronaldo Co. should:

Snow Productions, Inc. reports a balance of $28,000 in Accounts Receivable and $3,450 in the Allowance for Uncollectible Accounts. What is the net realizable value of the receivables?

Which of the following would be considered a cash equivalent?

Given the following data, which company would be more likely to be concerned about liquidity?

The journal entry to write off a customer's account under the direct write-off method is:

The entity that signs the note and promises to pay the required amount is referred to as:

Thames, Inc. has given you the following information from its aging of Accounts Receivable. Using this information, determine the amount of the journal entry to record the estimated uncollectible accounts. The current balance in Allowance for Doubtful Accounts is a $160 credit.

What type of account is Allowance for Doubtful Accounts?

Piper Inc. has cash of $62,000; net Accounts Receivable of $74,000; short-term investments of $15,000 and inventory of $67,000. It also has $51,000 in current liabilities and $73,000 in long-term liabilities. The quick ratio for Piper Inc. is:

A company has $316,000 in credit sales. The company uses the allowance method to account for uncollectible accounts. The Allowance for Doubtful Accounts now has a $1,896 debit balance. If the company estimates that $8,160 of accounts will be uncollectible based on an aging of Accounts Receivable, what will be the amount of the journal entry to record estimated uncollectible accounts?