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Exam 7: Cash and Receivables

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Question 81

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Define what it is meant by internal control.

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Internal control is part of the overall ...

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Question 82

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If a company uses the balance sheet approach to estimate bad debt expense, bad debt expense for a period can be determined by:

A) Multiplying net credit sales by the bad debt experience ratio.
B) Adding the beginning balance in the allowance for uncollectible accounts to the provision for uncollectible accounts and deducting the desired ending balance in the allowance for uncollectible accounts.
C) Multiplying ending accounts receivable in each age category by the expected loss ratio for each age category.
D) Taking the difference between the unadjusted balance in the allowance account and the desired balance.

E) B) and D)
F) A) and D)

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Question 83

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What is the balance in the allowance for sales returns account at the end of 2013?

Frankenstein Enterprises received two notes from customers for sales that Frankenstein made in 2013. The notes included: Note A: Dated 5/31/2013, principal of $120,000 and interest due 3/31/2014. Note B: Dated 7/1/2013, principal of $200,000 and interest at 8% annually, due on 4/1/2014. Frankenstein had accrued interest receivable from these notes of $14,400 in its 12/31/2013 balance sheet. What is the annual interest rate on Note A?

Accounting for the pledging of accounts receivable as collateral for a loan requires:

Is there any evidence in HP's disclosures above that are consistent with earnings management?

On May 12, 2013, Falwell Computing sold five computers to Computing Plus for $10,000, subject to terms 3/10, n30. Falwell uses the net method of accounting for sales discounts. Required: 1. Prepare the journal entry to record the sale. 2. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on May 20, 2013. 3. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on June 5, 2013.

The allowance for uncollectible accounts is a:

Which of the following is not true regarding accounting for transfers of receivables under IFRS?

What is the balance in HP's allowance for doubtful accounts at the end of the fiscal years 2010 and 2009, respectively?

Assume a company has been maintaining a receivables factoring program for the past five years and has been experiencing the same level of sales, factoring, and bad debts over that period. Customers typically pay their receivables within 60 days. Which of the following is true with respect to the current period (all else equal) ?

Compensating balances represent:

Calistoga's adjusted allowance for uncollectible accounts at December 31, 2013, is:

Tokyo Imports sold merchandise to Tall-Mart, receiving a six-month, noninterest-bearing note for $100,000. The implied discount rate on the note is 10% per annum. Tokyo uses a periodic inventory system. Required: 1. Prepare the journal entry to record the sale. 2. Compute the effective rate of interest.

Using a T-account for the allowance for doubtful accounts, identify the changes in the account during fiscal year 2007.

How might a company with loan receivables like Winchester be able to manage earnings in applying generally accepted accounting principles?

The purpose of assigning accounts receivable is to:

The balance in accounts receivable at the beginning of 2013 was $300. During 2013, $1,600 of credit sales were recorded. If the ending balance in accounts receivable was $250 and $100 in accounts receivable were written off during the year, the amount of cash collected from customers during 2013 was:

Although the net method is theoretically more sound, most companies use the gross method of accounting for cash discounts related to sales on account. Explain this statement.

Fitzgerald Company's Bank Reconciliation: