Question 1

It takes good judgment, which includes ethics, to become a successful accountant.

Accepted Answer

A) True 
 B)False

Question 2

Short-term investments:

Accepted Answer

A)   are reported after accounts receivable on the balance sheet.
B)   are more liquid than cash.
C)   are reported at historical cost on the balance sheet.
D)   include trading securities.E) All of the above
F) B) and D)

Question 3

The percent-of-sales method of computing uncollectible accounts is used for:

Accepted Answer

A)   interim statements because it is more accurate than the aging method.
B)   annual statements because it is more accurate than the aging method.
C)   interim statements because it is easier than the aging method.
D)   annual statements because it is easier than the aging method.E) A) and B)
F) A) and C)

Question 4

Complete the following chart by filling in the missing items. Use a 360-day year and round all answers to the nearest dollar and to 2 decimal places for percentages.

Accepted Answer

The answer of Complete the following chart by filling in...

Question 5

All investments in marketable securities NOT classified as trading securities or held-to-maturity securities are classified as:

Accepted Answer

A)   debt securities.
B)   equity securities.
C)   marketable securities.
D)   available-for-sale securities.E) B) and D)
F) B) and C)

Question 6

Which method does NOT use estimates?

Accepted Answer

A)   Direct-write off method
B)   Percent-of-Sales
C)   Aging-of-receivables method
D)   Allowance methodE) B) and C)
F) All of the above

Question 7

The following item appeared on a balance sheet: Receivables, less allowance of $100,855 …..$1,432,602
The gross balance in Accounts Receivable before the allowance was deducted was:

Accepted Answer

A)   $1,331,747.
B)   $1,432,602.
C)   $1,533,457.
D)   cannot be determined from the facts.E) A) and B)
F) B) and D)

Question 8

Companies are prohibited from combining the percent-of sales and the aging methods when estimating uncollectible accounts.

Accepted Answer

A) True 
 B)False

Question 9

On March 1, 2011, Anya's Toy Store purchased Hasbro stock for $33,400 with the intent of selling the stock at a profit within a few months. On April 10, dividends of $1,075 were received from the Hasbro stock. On December 31, 2011, the end of Anya's Toy Store's calendar year, the Hasbro stock had a market value of $32,300. On January 3, 2012, Anya's Toy Store sold all of the Hasbro stock for $34,000.
Prepare the journal entries needed to record the transactions for 2011 and 2012.

Accepted Answer

The answer of On March 1, 2011, Anya's Toy Store...

Question 10

The journal entry to record uncollectible-account expense includes a credit to Accounts Receivable.

Accepted Answer

A) True 
 B)False

Question 11

When evaluating the collectability of accounts receivable:

Accepted Answer

A)   the uncollectible-account expense is a contra account.
B)   the allowance for uncollectible accounts is an operating expense in the selling, general and administrative category.
C)   the allowance method uses estimates developed from the company's collection experience.
D)   the direct write-off method uses the allowance for uncollectible accounts to record bad debts.E) A) and D)
F) A) and B)

Question 12

The direct write-off method records uncollectible-account expense:

Accepted Answer

A)   at the end of the year.
B)   at the end of the accounting period.
C)   when the specific account receivable is determined to be uncollectible.
D)   under the percent-of-sale method.E) B) and D)
F) A) and C)

Question 13

The creditor has a note payable.

Accepted Answer

A) True 
 B)False

Question 14

Under the allowance method, the entry to write off a $2,600 uncollectible account includes a:

Accepted Answer

A)   debit to Accounts Receivable for $2,600.
B)   credit to Uncollectible-Account Expense for $2,600.
C)   credit to Allowance for Uncollectible Accounts for $2,600.
D)   debit to Allowance for Uncollectible Accounts for $2,600.E) C) and D)
F) B) and D)

Question 15

The Shady Bank lent Dorst Company $8,000 on December 1 for 6 months at an interest rate of 8%. The Shady Bank has a year end of December 31. Prepare the journal entries to record the (1) issuance of the note, (2) the accrued interest at December 31, and (3) the collection of the note on June 1. Round any amounts to the nearest dollar.

Accepted Answer

The answer of The Shady Bank lent Dorst Company $8,000...

Question 16

To record estimated bad debts under the direct write-off method:

Accepted Answer

A)   debit Allowance for Uncollectible Accounts and credit Accounts Receivable.
B)   debit Accounts Receivable and credit Allowance for Uncollectible Accounts.
C)   debit Uncollectible-Accounts Expense and credit Allowance for Uncollectible Accounts.
D)   no journal entry is needed.E) All of the above
F) A) and B)

Question 17

Under the allowance method:

Accepted Answer

A)   the company records the uncollectible-account expense when the customer does not pay.
B)   the allowance for uncollectible accounts is a contra account to gross revenue.
C)   the allowance for uncollectible accounts will normally have a debit balance.
D)   the company sets up an allowance for uncollectible accounts to estimate the amount of the receivables the company does not expect to collect.E) A) and B)
F) All of the above

Question 18

Ratios are used only by company management, and not investors, to evaluate the financial health of a company.

Accepted Answer

A) True 
 B)False

Question 19

The maturity value of a $40,000 note at 11% for 5 months is (round to nearest dollar) :

Accepted Answer

A)   $41,833.
B)   $40,880.
C)   $44,400.
D)   $47,260.E) A) and D)
F) None of the above

Question 20

XYZ Company has decided to factor its accounts receivable in order to get the immediate receipt of cash. The journal entry to record the factoring of the receivables would include:

Accepted Answer

A)   a debit to Accounts Receivable.
B)   a credit to Cash.
C)   a debit to Financing Expense.
D)   a credit to Interest Revenue.E) B) and C)
F) C) and D)

Exam 5: Short-Term Investments Receivables

Companies are prohibited from combining the percent-of sales and the aging methods when estimating uncollectible accounts.

Correct Answer
verified

Ratios are used only by company management, and not investors, to evaluate the financial health of a company.

Correct Answer
verified

The percent-of-sales method of computing uncollectible accounts is used for:

Correct Answer
verified

It takes good judgment, which includes ethics, to become a successful accountant.

Correct Answer
verified

The creditor has a note payable.

Correct Answer
verified

Correct Answer
verified

To record estimated bad debts under the direct write-off method:

Correct Answer
verified

When evaluating the collectability of accounts receivable:

Correct Answer
verified

Which method does NOT use estimates?

Correct Answer
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The maturity value of a $40,000 note at 11% for 5 months is (round to nearest dollar) :

Correct Answer
verified

Short-term investments:

Correct Answer
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Under the allowance method:

Correct Answer
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XYZ Company has decided to factor its accounts receivable in order to get the immediate receipt of cash. The journal entry to record the factoring of the receivables would include:

Correct Answer
verified

The following item appeared on a balance sheet: Receivables, less allowance of $100,855 …..$1,432,602 The gross balance in Accounts Receivable before the allowance was deducted was:

Correct Answer
verified

The journal entry to record uncollectible-account expense includes a credit to Accounts Receivable.

Correct Answer
verified

Under the allowance method, the entry to write off a $2,600 uncollectible account includes a:

Correct Answer
verified

Complete the following chart by filling in the missing items. Use a 360-day year and round all answers to the nearest dollar and to 2 decimal places for percentages.

Correct Answer
verified

Correct Answer
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All investments in marketable securities NOT classified as trading securities or held-to-maturity securities are classified as:

Correct Answer
verified

The direct write-off method records uncollectible-account expense:

Correct Answer
verified

Exam 5: Short-Term Investments Receivables

Companies are prohibited from combining the percent-of sales and the aging methods when estimating uncollectible accounts.

Correct AnswerverifiedShow Answer

Ratios are used only by company management, and not investors, to evaluate the financial health of a company.

Correct AnswerverifiedShow Answer

The percent-of-sales method of computing uncollectible accounts is used for:

Correct AnswerverifiedShow Answer

It takes good judgment, which includes ethics, to become a successful accountant.

Correct AnswerverifiedShow Answer

The creditor has a note payable.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

To record estimated bad debts under the direct write-off method:

Correct AnswerverifiedShow Answer

When evaluating the collectability of accounts receivable:

Correct AnswerverifiedShow Answer

Which method does NOT use estimates?

Correct AnswerverifiedShow Answer

The maturity value of a $40,000 note at 11% for 5 months is (round to nearest dollar) :

Correct AnswerverifiedShow Answer

Short-term investments:

Correct AnswerverifiedShow Answer

Under the allowance method:

Correct AnswerverifiedShow Answer

XYZ Company has decided to factor its accounts receivable in order to get the immediate receipt of cash. The journal entry to record the factoring of the receivables would include:

Correct AnswerverifiedShow Answer

The following item appeared on a balance sheet: Receivables, less allowance of $100,855 …..$1,432,602 The gross balance in Accounts Receivable before the allowance was deducted was:

Correct AnswerverifiedShow Answer

The journal entry to record uncollectible-account expense includes a credit to Accounts Receivable.

Correct AnswerverifiedShow Answer

Under the allowance method, the entry to write off a $2,600 uncollectible account includes a:

Correct AnswerverifiedShow Answer

Complete the following chart by filling in the missing items. Use a 360-day year and round all answers to the nearest dollar and to 2 decimal places for percentages.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

All investments in marketable securities NOT classified as trading securities or held-to-maturity securities are classified as:

Correct AnswerverifiedShow Answer

The direct write-off method records uncollectible-account expense:

Correct AnswerverifiedShow Answer

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