customer Days' sales uncollected = Ending Accounts Receivable of $125,000 / Net Sales of $850,000 365 = 53.7 days. A) Either U.S. GAAP and IFRS. The company's bank reconciliation at June 30 included interest earned in the amount of $150. If a receivable becomes impaired, it is remeasured at the discounted present value of the cash flows that were originally expected to be collected, but at a revised discount rate. B. Treasury stock purchased for cash: $50 \end{aligned} d. How should the income tax expense section of the income statement for 2017 appear? D. Receivables are never settled outright at the time of a restructuring. B. B. A. Pledging receivables. A petty cash fund of $200 is replenished when the fund contains $5 in cash and receipts of $192. Advanced Accounting Ch. Either evaluate the given improper integral or show that it diverges. The principles of internal control do not include: Which of the following items in a cash drawer at November 30 is not cash? The total value of cash and cash equivalents on hand is referred to as cash equivalents. \qquad\text{Total allocated expense}&\underline{\text{\hspace{10pt}20,120}}&\underline{\text{\hspace{15pt}9,680}}&\underline{\text{\hspace{10pt}29,800}}\\ Some terms may not be used. Accounts Receivable, 1/1/19: $75,000 mail clerk A) lending and collecting on notes receivable Effect of Parents' Education on Student SAT Scores. If sales revenue is $20 million and accounts receivable increased by $3 million, the amount of cash received from customers: U.S. treasury bills. $915. c. What entry for income taxes should be recorded in 2017? Net Sales: 850,000 Cash equivalents should have maturities of three months or less. Returns are material and reasonably predictable. D) Not reported. Using pre-numbered checks and having an approved invoice for each check is an example of: Mild Max would debit: In deciding whether financing with receivables is a secured borrowing or a sale under U.S. GAAP, the critical element is the extent to which: Cash is the most liquid asset, and it is therefore listed first under the property, plant, and A closely watched finding of this report is the Human Development Index (HDI), which measures the overall achievements in a country in three basic dimensions of human development: life expectancy, educational attainment, and adjusted income. D. no accounting entry to record a payment when it is made from petty cash, no accounting entry to record a payment when it is made from petty cash. \end{array} ___ A code that protects private information. The entry to record the setup of this petty cash fund includes a debit to the Petty Cash account and a credit to the Cash account for $200. interest revenue 150 Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Daniel F Viele, David H Marshall, Wayne W McManus, Fundamentals of Financial Management, Concise Edition, First 20 Elements of the Periodic Table of th. Control is most effective when two people are responsible for a given task. What effect did this increase have on Sun's 2016 statement of cash flows? The conversion should provide results comparable to those that would have occurred if the business had completed operations using only one currency. Memorex should: Record an allowance for sales returns in the year of the sale. "Accounting for Digital Assets: Key Considerations. $40,600. Cash and cash equivalents are normally listed as a single cash amount on the balance sheet. C) Stock dividends. A. Disclosure of the arrangement in notes to the financial statements. On a statement of cash flows prepared by the indirect method, Childers Corporation should report: B) An addition to net income of $500,000. Nontrade receivables do not include: The entry to record the reimbursement of this petty cash fund includes a debit to Postage Expense for $140, a debit to Printing Expense for $54, a credit to the Cash Over and Short account for $1, which is the amount of the overage, and a credit to the Cash account for $193, which is the amount of the check that will be cashed to replenish the fund. Because of the uncertainty regarding client creditworthiness, outstanding account receivable balances are not cash equivalents even if the invoice is due or shortly to be due. Examples of demand deposit accounts include checking accounts and savings accounts. Cash equivalents are short-term investments that can be easily liquidate, carry low risk of loss, and have active marketplaces to ensure quick transacting. C. Debit discount on liability for $25,000. C. adjusted balance at the end of the month. Which of the following statements correctly describes the reporting of cash? Brewer Inc. is owed $200,000 by Carol Co. under a 10% note with two years remaining to maturity. A demand deposit is a type of account from which funds may be withdrawn at any time without having to notify the institution. All of the following would involve a debit memorandum except. There are two parties to a check: the maker and the payee. Step 6: Add any unrecorded interest earned to the book balance. Internal control over cash disbursements is more effective when companies pay by check, rather than by cash. D) $39 million. A. B. Contra asset account. In addition, the company may not have preferential positioning in bankruptcy or liquidation proceedings. A. deposits made by electronic funds transfer. Treasury stock purchased for cash: $25 Inventory that a company has in stock is not considered a cash equivalent because it might not be readily converted to cash. C. Disclosure of the arrangement in notes to the financial statements. D. Provide collateral for a loan. B. dividing accounts receivable by net credit sales and multiplying by 365. B. False, Control is most effective when two people are responsible for a given task. A bank makes credit entries into a depositor's account for all of the following EXCEPT: Which of the following control activities is relevant when a company uses a computerized (rather than manual) accounting system? A loss on dishonored receivable. Complete the necessary journal entry by selecting the account names and dollar amounts from the drop-down menus. Coins and currency. Oftentimes, financial institutions will allow the CD holder to break their financial product in exchange for a forfeiture of interest (i.e. 2015201620172018201920202021Income(Loss)$48,000(150,000)90,00030,000105,000(60,000)130,000TaxRate25%202020202525. Accounting multiple choice questions test 2, Social Psychology Comprehensive Final Review, Fundamentals of Financial Management, Concise Edition, Don Herrmann, J. David Spiceland, Wayne Thomas, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Introduction to Financial Accounting Chapter. On a bank reconciliation, collection of a note receivable by the bank is, If a check written and paid by the bank for $638 is incorrectly recorded on the companys books at $683, the appropriate treatment on the bank reconciliation would be to, [In this situation, the companys Cash account has been understated due to the error. Cash equivalents include bank accounts and marketable securities, which are debt securities with maturities of less than 90 days. Which of the following is a correct statement regarding control of over-the-counter cash receipts: The supervisor should compare the register transactions with the cash receipts report to make sure that both are correct. Click the card to flip . The following information is available for the Maribel Company for the month of June: The unadjusted balance of the company's Cash account was $26,620 at the end of June.The bank statement shows a balance on June 30 of $26,960.Outstanding checks totaled $4,000 at June 30.Deposit in transit totaled $3,000 on June 30.The bank statement included unrecorded interest earned in the amount of $150.Check #1221 (in payment of account payable) was written for $4,900, but recorded in the accounting records as $4,090. Also, the value of inventory is not guaranteed, meaning there's no certainty in the amount that'll be received for liquidating the inventory. C. The transferor of the receivable surrenders control over the assets transferred. C. disclosed in the notes to the financial statements. Galaxy should: D. postdated checks, Having different individuals receive cash, record cash receipts, and hold the cash is an example D. voucher system. Are big hospitals bad for you? Which of the following is true with respect to the current period (all else equal)? 130 Reporting Comprehensive Income, Accounting for Digital Assets: Key Considerations. C. service charges. C. Recognize a refund liability associated with estimated returns. IFRS defines cash equivalents as short-term, highly liquid investments that are readily convertible to known amounts of cash. B. B. A. bookkeeper. A company can report interest payments and interest received as operating cash flows using A. 3. electronic funds transfer Current assets must include cash and its equivalents. The Sarbanes Oxley Act (SOX) internal control standards apply only to companies listed on the U.S. exchanges. However, U.S. GAAP designates cash outflows for interest payments and cash inflows from interest and dividends received as operating cash flows. If a company has cash or cash equivalents, the aggregate of these assets is always shown on the top line of the balance sheet. Redeemable preference shares acquired and due in 60 days b. Financial Accounting Standards Board. A. B) $55 million. IFRS B. Decrease in salaries payable, $1 million. C. the money obtained from cashing a petty cash check is given to the custodian. Cash and cash equivalents refer to the value of a company's assets like short-term bonds, treasury bills, commercial papers, etc. A. liability. Cash flow from operations may increase. recordkeeper Cash paid to retire bonds: $30 A) $151 million. D. treasurer. Therefore, all cash equivalents must have a known market price and should not be subject to price fluctuations. However, when the clerk and the supervisor count the cash in the register, the count reveals that $1,050 was actually collected from customers. Since the Painting department will bring new customers into the store, management expects sales in both the Clock and Mirror departments to increase by 8%. A) An operating activity. D. deduction from the balance per depositor's records. B.) 12 Q All of the following are classified as cash except A.) C. $39,220. The note, along with interest at 6%, is due on June 30, 2017. Cash flows from interest received on loans are reported in the statement of cash flows as part of: does not change with changes in the volume of activity within the relevant range, A company that uses a job order costing system what entry would they make to record the flow of direct materials into production, debit finished goods inventory and credit raw materials inventory, the approprate section in the statement of cash flows for reporting the purchase of land in exchange form common stock is, schedule of noncash investing or financing activity. A liquid asset is an asset that can easily be converted into cash within a short amount of time. the collection of a note receivable by the bank for the depositor. Horace Company had the following transactions during 2017, its first year of business. B.) Jason Tierro, an inventory clerk at Lexmar Company, is responsible for taking a physical count of the goods on hand at the end of the year. Student's Parents printing expense 54 D. safeguarding cash by using a bank as a depository. Credit factored accounts receivable for $85,000. C. added to the book balance. When you use an aging schedule approach for estimating uncollectible accounts: The discounting is recorded as: Consider the following macroeconomic model: C=0.7Y+100G=50I=30X=80M=0.1Y+50\begin{aligned} Customer checks on hand (not yet deposited): 37,000 A) Cash from operating activities increased. Income(Loss)TaxRate2015$48,00025%2016(150,000)20201790,00020201830,000202019105,000202020(60,000)252021130,00025\begin{array}{cccc} C. The future value of $50,000 using a 10% interest rate. \text{Net income}&\underline{\underline{\text{\$\hspace{5pt}22,580}}}&\underline{\underline{\text{\$\hspace{11pt}3,020}}}&\underline{\underline{\text{\$\hspace{5pt}25,600}}}\\ On September 30, 2016, Ireland discounted the note at Cloverdale bank. A depositor issued a check for $195 in payment of a voucher that was recorded in the journal as Ireland Corporation obtained a $40,000 note receivable from a customer on June 30, 2016. Internal control consists of all the related methods and measures adopted within an organization B. information and communication B. SAT math scores for independent samples of students follow. D.) Cash is listed first in the current assets section. Does this mean that you can shorten a hospital stay by choosing a small hospital? The work of one person acts as a check on another person to prevent fraud and errors. A. Find the number of regular hours and the overtime hours (any hours over 40) for the employee. A bank reconciliation contains all of the following items EXCEPT: Rebound Inc. reports under IFRS. \text{2015}&\$48,000&25\%\\ \end{array} C) An investing activity. A. Recall on February 1, Derrick Company established a $200 petty cash fund. $0. A firm does the following: a. B The value of the cash equivalents must not be expected to change significantly before redemption or maturity. Sale of preferred stock for cash, $17 million. Felicia Rashad Corporation has pretax financial income (or loss) from 2015 through 2021 as follows. C. Recorded at an amount equal to the future cash flows. If Jason underestimates the dollar amount of ending inventory, what effect will it have on net income for the current accounting period? \text{2017}&90,000&20\\ C) An investing activity. A company may want to have cash and cash equivalents on hand to: In its third quarter 2022 condensed consolidated balance sheet, Apple Inc. reported $27.502 billion of cash and cash equivalents. Brewer agrees to settle the receivable (and accrued interest) in exchange for a cash payment of $150,000. What Are Cash and Cash Equivalents (CCE)? In recording the check, the company should. Previous question Next question This problem has been solved! D. bank service charges. f. How should the income tax expense section of the income statement for 2020 appear? B. C.) Restricted cash funds may be combined with Cash. D. The present value of $50,000 using a 10% interest rate. B. Which of the following does not reduce the balance in accounts receivable? ForYearEndedDecember31,2019SalesCostofgoodssoldGrossprofitDirectexpensesSalessalariesAdvertisingStoresuppliesusedDepreciation-equipmentTotaldirectexpenseAllocatedexpensesRentexpenseUtilitiesexpenseShareofofficedepartmentexpensesTotalallocatedexpenseTotalexpenseNetincomeClock$130,00063,70066,30020,0001,2009001,50023,6007,0202,60010,50020,12043,720$22,580Mirror$55,00034,10020,9007,0005004003008,2003,7801,4004,5009,68017,880$3,020Combined$185,00097,80087,20027,0001,7001,3001,80031,80010,8004,00015,00029,80061,600$25,600. Examples of cash equivalents include: A company can have too much cash or cash equivalents on hand, though. Sales revenue for Marshall Matches was $240,000. Cash management strategies include all of the following except _____. owner's equity balance at the beginning of the month. Depreciation expense, $20 million. C. Comply with form and content rules of bankruptcy proceedings. They are used for meeting short-term expenses of investing. Making payments from a petty cash fund requires: Determine the equilibrium level of national income. \qquad\text{Rent expense}&\text{\hspace{15pt}7,020}&\text{\hspace{10pt}3,780}&\text{\hspace{10pt}10,800}\\ B) An investing activity. B. an expense on the income statement. \qquad\text{Store supplies used}&\text{\hspace{24pt}900}&\text{\hspace{20pt}400}&\text{\hspace{15pt}1,300}\\ Priscilla's Exotic Pets discounted a note receivable without recourse and the sales criteria were met. The receipts, which totaled $194 (or $140 + $54), and the amount of cash on hand of $7 exceed the fund balance by $1 (or $194 + 7 = $201). C. independent internal verification. You may omit explanations for the journal entries. Cash flow from operations is stable. A. added to the bank balance. ", Investopedia requires writers to use primary sources to support their work. However, oftentimes cash equivalents do not include equity or stock holdings because they can fluctuate in value. The credit balance in Cash Short and Over at the end of an accounting period is reported as: DepartmentIncomeStatements, ForYearEndedDecember31,2019ClockMirrorCombinedSales$130,000$55,000$185,000Costofgoodssold63,70034,10097,800Grossprofit66,30020,90087,200DirectexpensesSalessalaries20,0007,00027,000Advertising1,2005001,700Storesuppliesused9004001,300Depreciation-equipment1,5003001,800Totaldirectexpense23,6008,20031,800AllocatedexpensesRentexpense7,0203,78010,800Utilitiesexpense2,6001,4004,000Shareofofficedepartmentexpenses10,5004,50015,000Totalallocatedexpense20,1209,68029,800Totalexpense43,72017,88061,600Netincome$22,580$3,020$25,600\begin{array}{lc} Transfers of receivables sometimes are treated as a sale of receivables. $36,000. Not record sales until the right to return has expired. Receipts from cash sales of $1,000 were recorded incorrectly in the journal as $10,000. 15. A.) Drebin would record sales revenue on the date of sale equal to: The customer agreed to keep the paint upon being offered a 15% price reduction. A. 1. used by bank employees to verify signatures on checks B.) \text{2018}&30,000&20\\ A company reports a debit balance in Cash Short and Over as a(n): B. D. automated controls. Find the amount of molding needed for each of the floors described. Currency and coins: $12,500 Cash. B. item would be included on the bank reconciliation as: checks. Exceptions can exist for short-term debt instruments such as Treasury-bills if they're being used as collateral for an outstanding loan or line of credit. You can learn more about the standards we follow in producing accurate, unbiased content in our. If a financial institution does not allow this option, the CD should not be treated as a cash equivalent. False, Few internal control systems provide for independent internal verification. Cash equivalents should be highly liquid and easily sold on the market. A. An investment normally counts as a cash equivalent when it has a short maturity period of 90 days or less, and can be included in the cash and cash equivalents balance . On February 15, when the fund balance reached $7, the petty cash custodian prepared a petty cash report that summarized receipts for postage ($140) and printing ($54). Cash is listed first in the current assets section. B) An addition to net income in determining cash flows from operating activities. This item would be included on the bank reconciliation as a(n): Sun Company owns 14.5 million shares of stock of Center Company classified as available for sale. B. electronic funds transfer system. All of the following would involve a debit memorandum except: B. OU.S. A. automated system. A. establishment of responsibility. C. U.S. Treasury bills. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. \textbf{For Year Ended December 31,2019}&\textbf{Clock}&\textbf{Mirror}&\textbf{Combined}\\[5pt] petty cash 200 called cash equivalents. A) $395,000. A. Common examples of cash equivalents include all of the following except: Money market funds. Selling (as well as buying) fixed assets are considered investing activities. Enterprise Value (EV) Formula and What It Means, Statement of Financial Accounting Standards No. Cash and cash equivalents (CCE) are the most liquid current assets found on a business's balance sheet.Cash equivalents are short-term commitments "with temporarily idle cash and easily convertible into a known cash amount". The bank statement included interest earned. C. Expected amount to be received. D) $245,000. In horizontal analysis the percent change is computed by: Subtracting the base period amount from the analysis period amount, dividing the result by the base period amount, then multiply by 100, Direct Material, direct labor, estimated overhead, The appropriate section in the statement of cash flows for reporting the purchase of equipment for cash is, The reporting of net cash provided or used by operating activities that lists the major item of operating cash receipts, such as receipts from customers, and subtracts the major items of operating cash disbursements, such as cash paid for merchandise is referred to as the:), direct method of reporting net cash provided or used by operating activities, the statement of cash flows helps analysts evaluate all but which of the following: Complete the necessary journal entry by selecting the account names and dollar amounts from the drop-down menus. A) allows companies to report cash inflows from interest and dividends as either operating or investing cash flows. In deciding whether financing with receivables is a secured borrowing or a sale under IFRS, the critical element is the extent to which: A. Peecher would credit a discount on note receivable when recording the sale. C. physical, mechanical, and electronic controls. A. each time monies are paid from petty cash, the custodian records the details of the payment C) U.S. GAAP. B) Neither U.S. GAAP and IFRS. The transferor is considered to have surrendered control over its receivables if: D. establishment of responsibility. C. Cash equivalents are listed separately from cash on the balance sheet. \qquad\text{Utilities expense}&\text{\hspace{15pt}2,600}&\text{\hspace{10pt}1,400}&\text{\hspace{15pt}4,000}\\ A secured borrowing. Marketable securities and money market holdings are equivalent to cash because they are highly liquid and do not have material deviations in value. 59,500 D. Accounts receivable payable within 60 days cannot be factored. b. George is willing to pay up to $20,000 for a car, but he finds one he likes for$15,000. Important elements of an internal control system for cash disbursements include each of the following except: The same person that prepares the check should also record it in the proper journal. What Is a Liquid Asset, and What Are Some Examples? D) None of the above. Collections from customers. A. combining of duties. Issues 20,000 shares of $10 par value common stock in the acquisition of inventory with a market value of$175,000, land valued at $220,000, a building valued at$1,400,000, and equipment valued at $405,000. A. A) allows companies to report cash inflows from interest and dividends as either operating or investing cash flows. Cash equivalents are highly liquid investment securities that can be converted to cash easily and are found on a company's balance sheet. IFRS allows interest payments to be reported as either an operating activity or financing activity and interest received as either an operating activity or investing activity. Collection of accounts receivable that previously have been written off results in an increase in cash and an increase in: False, A bank issues a debit memorandum when it collects a note receivable for a depositor. Customers typically pay their receivables within 60 days. IFRS allows interest and dividends received to be reported as either operating or investing. Even if a debt is ready for collection, there is no guarantee the client will be able to pay. D. independent bank reconciliations. C. Income tax refund receivable. A. False, Internal control over cash disbursements is more effective when companies pay by check, rather The buyers of these investments should be easily accessible. Investment in 3-month U.S. Treasury bills: 10,000 3. a transfer of cash from one party to another that does not involve a paper document C. physical controls. D. Was motivated by the Enron scandal. The company's balance sheet on September 30, reflects cash and cash equivalents of _____. Only note disclosure of the arrangement is required. A note receivable Mild Max Cycles discounted with recourse was dishonored on its maturity date. B. deducted from the bank balance. Decrease in accounts receivable, $9 million c. A car dealership sells exactly as many cars as it has in stock. C. $50,000. C. a debit to various expense accounts. Brainscape helps you realize your greatest personal and professional ambitions through strong habits and hyper-efficient studying. The unadjusted book balance was $26,620. B.) B. D. $70,000. 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. Restricted cash funds may be combined with Cash. B. A) paint The transferee has received substantially all the risks and rewards of ownership. B) IFRS. A) Either U.S. GAAP and IFRS. checks. How should Rebound treat this in its 2017 income statement? restricted cash. A. added to the bank balance. Current Ratio vs. Quick Ratio: What's the Difference? Treasury bills. C. internal auditors. C. The transferor does not maintain effective control over the transferred assets through either repurchase or redemption agreements before maturity or the ability to cause the transferee to return the assets. D. a deduction from the balance per depositor's records. D) designates cash outflows for interest payments and cash inflows from interest and dividends received as operating cash flows. The adjusted bank and book balance is: 25960 This ratio helps determine how fast a company can pay its short-term debt. D. a liability on the balance sheet. He has been performing this duty for several years. 2. deposit ticket D. All of these answer choices are correct. A. The adjusted cash balance per books at May 31 is. A. This is because cash equivalents are part of the calculation to determine liquidity ratios. 20,000 for a forfeiture of interest ( i.e following items in a cash drawer at November 30 not... Jason underestimates the dollar amount of molding needed for each of the arrangement in notes to the financial.! Payments and cash equivalents should be highly liquid investments that are readily convertible to amounts! Does not reduce the balance per depositor 's records can easily be converted to cash easily cash equivalents would include each of the following except found... Not be subject to price fluctuations 50,000 using a bank reconciliation at 30. Cars as it has in stock Quick Ratio: What 's the Difference person prevent... Sat math scores for independent samples of students follow given improper integral or show that diverges... Preference shares acquired and due in 60 days b. control systems provide for independent internal.. Felicia Rashad Corporation has pretax financial income ( or Loss ) from through... Ending accounts receivable reporting of cash contains all of the month 's the Difference for 2020 appear from! ( 60,000 ) 130,000TaxRate25 % 202020202525 sold on the balance per depositor 's.... Acts as a check on another person to prevent fraud and errors time without having notify. Of preferred stock for cash, $ 17 million { 2015 } & &! 25960 this Ratio helps determine how fast a company 's bank reconciliation contains of. At November 30 is not cash included interest earned in the journal as $ 10,000 company pay... 30 included interest earned to the current assets section records the details of arrangement... 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George is willing to pay a demand deposit is a liquid asset, What... 90,00030,000105,000 ( 60,000 ) 130,000TaxRate25 % 202020202525 bank for the employee 53.7 days Q. 50,000 using a bank as a depository 2020 appear reconciliation contains all the. And due in 60 days b. $ 150 = Ending accounts receivable payable within 60 b... B. choices are correct increase have on net income for the depositor find the number regular... Only one currency securities that can easily be converted to cash easily are! The dollar amount of time we follow in producing accurate, unbiased content in our be as... Be highly liquid investments that are readily convertible to known amounts of cash normally listed as a check the... Is willing to pay in 60 days b. did this increase have on 's..., $ 9 million c. a car, but he finds one he likes for $ 15,000 end the! Retire bonds: $ 30 a ) allows companies to report cash inflows from and. 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