ACC 301: Chapter 6 (theory)

Pregunta 1 de 45

1

Which of the following items may be confused with cash but is normally categorized under a different balance sheet caption (not categorized as cash)?

Selecciona una de las siguientes respuestas posibles:

Foreign currency on deposit in a foreign bank.
Un-deposited credit card sales receipts.
Postdated checks.
Negotiable checks.

Explicación

Pregunta 2 de 45

1

The definition of cash equivalents includes:

I. available to pay current obligations
II. short-term, highly liquid investments

III. so near maturity that there is little risk of changes in value because of changes in interest rates

Selecciona una de las siguientes respuestas posibles:

I and II.
II and III.
I, II, and III.
I and III.

Explicación

Pregunta 3 de 45

1

Which of the following is an important element of internal control over cash?

Selecciona una de las siguientes respuestas posibles:

They are required for all companies.
They include a petty cash system.
They guarantee that a company's financial reports are reliable.
All of the choices are correct regarding internal controls.

Explicación

Pregunta 4 de 45

1

Selecciona la opción correcta de los menús desplegables para completar el texto.

Non-trade receivables include ( deposits with utilities, notes receivable, accounts receivable ) while trade receivables include ( accounts receivable, advances to employees, loans made by nonfinancial companies ).

Explicación

Pregunta 5 de 45

1

Selecciona la opción correcta de los menús desplegables para completar el texto.

Revenue recognition criteria include ( realization must have occurred, readily available for general use ) and ( must be earned, not bound by any restrictions ) which result in revenue generally being recognized when ( the product or service is delivered, all defective items have been returned ).

Explicación

Pregunta 6 de 45

1

Selecciona la opción correcta del menú desplegable para completar el texto.

Cash (sales) discounts ( induce prompt payment, are price reductions for large purchases, hide real prices from competitors ) and are recorded using either the gross price method or the net price method.

Explicación

Pregunta 7 de 45

1

When a company records accounts receivable using the gross price method and the customer pays and takes advantage of the discount, which of the following is true?

Selecciona una de las siguientes respuestas posibles:

The company records accounts receivable and sales at the net invoice price and no further adjustment is required.
No adjustment is needed because the amount of cash received is equal to the recorded amount of the receivable.
The company credits an account entitled Sales Discounts Not Taken.
The difference between the cash received and the original amount of accounts receivable is recorded as a debit to Sales Discounts Taken.

Explicación

Pregunta 8 de 45

1

Selecciona la opción correcta del menú desplegable para completar el texto.

A ( sales allowance, cash discount, sales return ) occurs when a customer retains defective goods; conceptually, the company should estimate and record in the period of sale so as to properly report sales revenue and ending accounts receivable.

Explicación

Pregunta 9 de 45

1

Which of the following statements is correct with regard to the direct write-off method?

I. Allows the manipulation of income.
II. Is simple to apply.

Selecciona una de las siguientes respuestas posibles:

I only.
II only.
I and II
Neither I nor II

Explicación

Pregunta 10 de 45

1

Selecciona la opción correcta del menú desplegable para completar el texto.

Using the ( % of outstanding accounts receivable, direct write-off, % of credit sales ) approach, a company considers the existing balance in the allowance account and records bad debt expense as the amount necessary to adjust the allowance to its desired balance.

Explicación

Pregunta 11 de 45

1

The net realizable value of a company's accounts receivable is the balance of the accounts receivable account

I. Plus the allowance for sales returns
II. Minus the allowance for doubtful accounts
III. Plus deferred gross profit
IV. Minus allowance for sales discounts

Selecciona una de las siguientes respuestas posibles:

I, II, and III
II and IV
II, III, and IV
I, II, III, and IV

Explicación

Pregunta 12 de 45

1

What method of bad debt estimation categorizes individual accounts receivable based on the length of time outstanding? Why is this length of time an important factor?

Selecciona una de las siguientes respuestas posibles:

Aging is based on the fact that credit risk tends to decrease with the age of the account receivable.
A company that "ages" its accounts receivable first classifies the individual accounts receivable based on the length of time they have been outstanding and then estimates the allowance for bad debts by applying appropriate bad debts percentages to each age category.
Aging is a relatively simple balance sheet approach which bases the estimated expense on the historical relationship between the actual bad debts and the outstanding accounts receivable balance at the end of the year.
All of the choices are correct regarding aging of accounts receivable.

Explicación

Pregunta 13 de 45

1

When accounts receivable are sold or factored

Selecciona una de las siguientes respuestas posibles:

the transaction is accounted for as a lending agreement.
the transferor records a gain or loss.
the creditor can require the amounts collected from the accounts receivable be used to repay the amount owed.
the proceeds from the transfer of financial assets are recorded as a liability.

Explicación

Pregunta 14 de 45

1

Accounts receivable are considered sold when

I. the transferred assets are put beyond the reach of the transferor.
II. the transferee has the right to sell the transferred assets.
III. the transferee has recourse against the transferor.
IV. the transferor does not maintain effective control over the transferred assets.

Selecciona una de las siguientes respuestas posibles:

I, II, III, and IV.
I, III, and IV.
I, II, and III.
I, II, and IV

Explicación

Pregunta 15 de 45

1

Selecciona la opción correcta de los menús desplegables para completar el texto.

Unlike accounts receivable, notes receivable ( are negotiable, arise from the company's operations ) and usually ( involve interest, are grouped as trade or nontrade in the ).

Explicación

Pregunta 16 de 45

1

Sally Company accepted a 3-month, non-interest-bearing note receivable on December 1. If Sally's year end is December 31, what entry would be recorded

Selecciona una de las siguientes respuestas posibles:

debit Cash and credit Interest Revenue.
debit Interest Expense and credit Cash.
debit Discount on Note Receivable and credit Interest Revenue.
debit Interest Expense and credit Discount on Note Receivable.

Explicación

Pregunta 17 de 45

1

Selecciona la opción correcta de los menús desplegables para completar el texto.

If a note is ( transferred with recourse, assigned ), the company reports a(n) ( liability, expense ) at the estimated amount it would have to pay the buyer.

Explicación

Pregunta 18 de 45

1

Selecciona la opción correcta de los menús desplegables para completar el texto.

When a note receivable is transferred, the cash proceeds equal the ( maturity value, present value ) of the note ( less, plus ) a discount. The discount is determined by multiplying the discount rate times the ( maturity value of the note, present value of the note, face value of the note less total intere ) for the discount period.

Explicación

Pregunta 19 de 45

1

Selecciona la opción correcta del menú desplegable para completar el texto.

When financial assets are transferred, U.S. GAAP focuses on whether ( control has been surrendered, an accounting mismatch arises, the seller has transferred risk/rewards ) in determining whether the transfer is accounted for as a secured borrowing or a sale. Under IFRS, the derecognition of a financial asset is based on whether the seller has transferred substantially all the risks and rewards of ownership.

Explicación

Pregunta 20 de 45

1

Which of the following transactions would not be appropriate for the use of a petty cash system?

Selecciona una de las siguientes respuestas posibles:

Paying for postage.
Paying cab fare home for late-working employees.
Paying for NSF checks.
Paying for small amounts of office supplies.

Explicación

Pregunta 21 de 45

1

Why are actual expenses, rather than the petty cash account, debited when the fund is replenished?

Selecciona una de las siguientes respuestas posibles:

Because the entry records the expenses incurred for the period.
Because this process provides an external, independent control to verify a company's cash balance.
Because the petty cash fund is always carried in the company's accounting records at its current remaining balance.
All of the choices are correct regarding the petty cash account.

Explicación

Pregunta 22 de 45

1

Differences between the cash balance listed on a company's bank statement and the balance shown in the company's cash account include all of the following except:

Selecciona una de las siguientes respuestas posibles:

Outstanding checks.
Bank service charge expense.
Recourse liability expense.
Deposits in transit.

Explicación

Pregunta 23 de 45

1

Which of the following items appearing on a bank reconciliation would require the company to make an adjusting entry?

Selecciona una de las siguientes respuestas posibles:

Bank service charge.
Deposit in transit
Outstanding checks.
All of the choices would require an adjusting entry.

Explicación

Pregunta 24 de 45

1

Which of the following items should be classified under the heading of cash on the balance sheet?

Selecciona una o más de las siguientes respuestas posibles:

Explicación

Pregunta 25 de 45

1

Greenfield Company had the following cash balances at December 31, 2016:

- Cash in banks: $1,300,000
- Petty cash funds (all funds were reimbursed on December 31, 2016): 20,000
- Cash legally restricted for additions to plant (expected to be disbursed in 2018): 2,000,000

Cash in banks includes $300,000 of compensating balances against short-term borrowing arrangements at December 31, 2016. The compensating balances are not legally restricted as to withdrawal by Greenfield.

In the current assets section of Greenfield's December 31, 2016, balance sheet, what total amount should be reported as cash?

Selecciona una de las siguientes respuestas posibles:

$3,020,000
$1,320,000
$3,320,000
$1,020,000

Explicación

Pregunta 26 de 45

1

Selecciona la opción correcta de los menús desplegables para completar el texto.

Cash on hand is ( included in, excluded from ) cash on the company's balance sheet.

Checking account is ( included in, excluded from ) cash on the company's balance sheet.

Sinking fund is ( excluded from, included in ) cash on the company's balance sheet.

Savings account is ( included in, excluded from ) cash on the company's balance sheet.

Certificates of deposit is ( excluded from, included in ) cash on the company's balance sheet.

Negotiable checks is ( included in, excluded from ) cash on the company's balance sheet.

Compensating balance is ( excluded from, included in ) cash on the company's balance sheet.

Travel advance is ( excluded from, included in ) cash on the company's balance sheet.

Deposits in a foreign bank is ( included in, excluded from ) cash on the company's balance sheet.

Explicación

Pregunta 27 de 45

1

Which of the following would not be included with cash and cash equivalents on the balance sheet?

Selecciona una de las siguientes respuestas posibles:

unrestricted funds on deposit.
checks.
sinking funds.
undeposited credit card sales receipts.

Explicación

Pregunta 28 de 45

1

A short-term investment is considered a cash equivalent if it is

Selecciona una de las siguientes respuestas posibles:

highly liquid.
readily convertible into an unknown amount of cash.
within 120 days of maturity.
all of these choices.

Explicación

Pregunta 29 de 45

1

Internal cash control procedures are

Selecciona una de las siguientes respuestas posibles:

required by law for publicly traded companies.
enhanced by routine reviews of the accuracy of recorded cash transactions.
enhanced by the separation of employee duties.
all of these choices.

Explicación

Pregunta 30 de 45

1

All of the following are a cash control over receipts except

Selecciona una de las siguientes respuestas posibles:

daily recording of all cash receipts in the accounting records.
daily deposit of all receipts in the company’s bank account.
immediate counting of receipts by the person opening the mail or the salesperson using the cash register, and subsequent verification by an independent person.
making all payments by check (or electronic funds transfer) so there is a record for every company expenditure.

Explicación

Pregunta 31 de 45

1

Which of the following would not be classified as a trade receivable?

Selecciona una de las siguientes respuestas posibles:

customer accounts receivable for the sale of merchandise on account.
short-term customer note receivable in exchange for merchandise.
accrued interest on investments.
obligations arising from customers for services rendered.

Explicación

Pregunta 32 de 45

1

Which of the following is treated as a cash sale?

Selecciona una de las siguientes respuestas posibles:

credit card sale involving a bank credit card.
credit card sale involving the store's credit card.
sale involving the receipt of a note receivable.
all of these choices.

Explicación

Pregunta 33 de 45

1

When a customer retains defective goods at a reduced price, the reduction is called a

Selecciona una de las siguientes respuestas posibles:

sales discount.
sales return.
sales allowance.
trade discount.

Explicación

Pregunta 34 de 45

1

Using the net price method, which account does not apply when recording the receipt of payment on account after the discount period?

Selecciona una de las siguientes respuestas posibles:

Accounts Receivable.
Cash.
Sales Discounts Not Taken.
Sales Revenue.

Explicación

Pregunta 35 de 45

1

Using the gross price method, the journal entry for a sale on account for $10,000 under the terms 2/10, n/30 would include a

Selecciona una de las siguientes respuestas posibles:

debit to Cash for $9,800.
debit to Accounts Receivable for $10,000.
debit to Accounts Receivable for $9,800.
debit to Sales Revenue for $9,800.

Explicación

Pregunta 36 de 45

1

Which of the following is not true of the account Allowance for Doubtful Accounts?

Selecciona una de las siguientes respuestas posibles:

It is an expense account.
It is reported on the balance sheet.
It is debited when writing off an uncollectible account receivable.
Its balance is deducted from the balance in Accounts Receivable to determine the net realizable value of the company’s receivables.

Explicación

Pregunta 37 de 45

1

Using the allowance method, which is the proper journal entry for writing off an uncollectible account?

Selecciona una de las siguientes respuestas posibles:

Debit Bad Debt Expense; credit Accounts Receivable.
Debit Bad Debt Expense; credit Allowance for Doubtful Accounts.
Debit Allowance for Doubtful Accounts; credit Accounts Receivable.
Debit Accounts Receivable; credit Allowance for Doubtful Accounts.

Explicación

Pregunta 38 de 45

1

Which of the following is not true of the direct write-off method?

Selecciona una de las siguientes respuestas posibles:

It is the preferred method under GAAP.
Bad debt expense is recorded only when a specific customer account is determined uncollectible.
It matches bad debts of previous sales against current sales.
An uncollectible account is written off by debiting Bad Debt Expense and crediting Accounts Receivable.

Explicación

Pregunta 39 de 45

1

If the transfer of receivables does not meet the conditions of a sale, it should be accounted for as

Selecciona una de las siguientes respuestas posibles:

secured borrowing.
factoring.
a securitization.
a sale with recourse.

Explicación

Pregunta 40 de 45

1

If Gable Company sells $50,000 of its accounts receivable to a factor without recourse, receiving 90% value and paying a 10% commission, the journal entry will include

Selecciona una de las siguientes respuestas posibles:

a debit to Cash for $40,000.
a debit to Receivable from Factor for $5,000.
a debit to Factoring Expense for $5,000.
all of these

Explicación

Pregunta 41 de 45

1

A retailer made $2,000 of bank credit card sales and is charged a 4% fee when depositing the receipts. Assuming it uses the gross price method of recording sales, the entry will include

Selecciona una de las siguientes respuestas posibles:

a debit to Cash for $2,000.
a credit to Sales Revenue for $1,920.
a debit to Credit Card Expense for $80.
none of these

Explicación

Pregunta 42 de 45

1

Which of the following are true of a note receivable?

Selecciona una de las siguientes respuestas posibles:

A note receivable gives the holder the right to collect money on demand.
A note receivable is not a negotiable instrument.
A note receivable usually does not involve interest.
None of these choices are true of a note receivable

Explicación

Pregunta 43 de 45

1

The journal entry for the collection of a $10,000, 90-day, 10% note receivable would include

Selecciona una de las siguientes respuestas posibles:

a debit to Cash for $10,000.
a credit to Notes Receivable for $9,750.
a credit to Interest Revenue for $250.
a debit to Interest Expense for $250.

Explicación

Pregunta 44 de 45

1

A petty cash fund is established for $300. At the end of the accounting period, there is $50 cash and $245 in petty cash vouchers. The journal entry to replenish the fund will include

Selecciona una de las siguientes respuestas posibles:

a debit to Petty Cash for $250.
a credit to Cash for $250.
a debit to various expenses for $245.
a credit to Cash Short and Over for $5.

Explicación

Pregunta 45 de 45

1

On a bank reconciliation, which of the following would be deducted from the bank statement balance?

Selecciona una de las siguientes respuestas posibles:

deposits in transit.
outstanding checks.
bank service charges.
a note collected by the bank.

	Creado por jmkerstell hace más de 8 años

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ACC 301: Chapter 6 (theory)

Pregunta 1 de 45

Which of the following items may be confused with cash but is normally categorized under a different balance sheet caption (not categorized as cash)?

Selecciona una de las siguientes respuestas posibles:

Explicación

Pregunta 2 de 45

The definition of cash equivalents includes: I. available to pay current obligations II. short-term, highly liquid investments III. so near maturity that there is little risk of changes in value because of changes in interest rates

Selecciona una de las siguientes respuestas posibles:

Explicación

Pregunta 3 de 45

Which of the following is an important element of internal control over cash?

Selecciona una de las siguientes respuestas posibles:

Explicación

Pregunta 4 de 45

Selecciona la opción correcta de los menús desplegables para completar el texto.

Explicación

Pregunta 5 de 45

Selecciona la opción correcta de los menús desplegables para completar el texto.

Explicación

Pregunta 6 de 45

Selecciona la opción correcta del menú desplegable para completar el texto.

Cash (sales) discounts induce prompt payment are price reductions for large purchases hide real prices from competitors( induce prompt payment, are price reductions for large purchases, hide real prices from competitors ) and are recorded using either the gross price method or the net price method.

Explicación

Pregunta 7 de 45

When a company records accounts receivable using the gross price method and the customer pays and takes advantage of the discount, which of the following is true?

Selecciona una de las siguientes respuestas posibles:

Explicación

Pregunta 8 de 45

Selecciona la opción correcta del menú desplegable para completar el texto.

A sales allowance cash discount sales return( sales allowance, cash discount, sales return ) occurs when a customer retains defective goods; conceptually, the company should estimate and record in the period of sale so as to properly report sales revenue and ending accounts receivable.

Explicación

Pregunta 9 de 45

Which of the following statements is correct with regard to the direct write-off method? I. Allows the manipulation of income. II. Is simple to apply.

Selecciona una de las siguientes respuestas posibles:

Explicación

Pregunta 10 de 45

Selecciona la opción correcta del menú desplegable para completar el texto.

Explicación

Pregunta 11 de 45

The net realizable value of a company's accounts receivable is the balance of the accounts receivable account I. Plus the allowance for sales returns II. Minus the allowance for doubtful accounts III. Plus deferred gross profit IV. Minus allowance for sales discounts

Selecciona una de las siguientes respuestas posibles:

Explicación

Pregunta 12 de 45

What method of bad debt estimation categorizes individual accounts receivable based on the length of time outstanding? Why is this length of time an important factor?

Selecciona una de las siguientes respuestas posibles:

Explicación

Pregunta 13 de 45

When accounts receivable are sold or factored

Selecciona una de las siguientes respuestas posibles:

Explicación

Pregunta 14 de 45

Selecciona una de las siguientes respuestas posibles:

Explicación

Pregunta 15 de 45

Selecciona la opción correcta de los menús desplegables para completar el texto.

Unlike accounts receivable, notes receivable are negotiable arise from the company's operations( are negotiable, arise from the company's operations ) and usually involve interest are grouped as trade or nontrade in the( involve interest, are grouped as trade or nontrade in the ).

Explicación

Pregunta 16 de 45

Sally Company accepted a 3-month, non-interest-bearing note receivable on December 1. If Sally's year end is December 31, what entry would be recorded

Selecciona una de las siguientes respuestas posibles:

Explicación

Pregunta 17 de 45

Selecciona la opción correcta de los menús desplegables para completar el texto.

If a note is transferred with recourse assigned( transferred with recourse, assigned ), the company reports a(n) liability expense( liability, expense ) at the estimated amount it would have to pay the buyer.

Explicación

Pregunta 18 de 45

Selecciona la opción correcta de los menús desplegables para completar el texto.

Explicación

Pregunta 19 de 45

Selecciona la opción correcta del menú desplegable para completar el texto.

Explicación

Pregunta 20 de 45

Which of the following transactions would not be appropriate for the use of a petty cash system?

Selecciona una de las siguientes respuestas posibles:

Explicación

Pregunta 21 de 45

Why are actual expenses, rather than the petty cash account, debited when the fund is replenished?

Selecciona una de las siguientes respuestas posibles:

Explicación

The definition of cash equivalents includes:

I. available to pay current obligations
II. short-term, highly liquid investments

III. so near maturity that there is little risk of changes in value because of changes in interest rates

Cash (sales) discounts ( induce prompt payment, are price reductions for large purchases, hide real prices from competitors ) and are recorded using either the gross price method or the net price method.

A ( sales allowance, cash discount, sales return ) occurs when a customer retains defective goods; conceptually, the company should estimate and record in the period of sale so as to properly report sales revenue and ending accounts receivable.

Which of the following statements is correct with regard to the direct write-off method?

I. Allows the manipulation of income.
II. Is simple to apply.

The net realizable value of a company's accounts receivable is the balance of the accounts receivable account

I. Plus the allowance for sales returns
II. Minus the allowance for doubtful accounts
III. Plus deferred gross profit
IV. Minus allowance for sales discounts

Unlike accounts receivable, notes receivable ( are negotiable, arise from the company's operations ) and usually ( involve interest, are grouped as trade or nontrade in the ).

If a note is ( transferred with recourse, assigned ), the company reports a(n) ( liability, expense ) at the estimated amount it would have to pay the buyer.