Returns are material and reasonably predictable. A. (Round percents to the nearest one-tenth and dollar amounts to the nearest whole dollar.). On September 25, 2021, Apple Inc. had reported $34.94 billion of cash and cash equivalents. The transferor of the receivable surrenders control over the assets transferred. C) Differences between net income and net operating cash flow Which of the following is true about accounting for a troubled debt restructuring? B. D) $245,000. C. documentation procedures. Transfers of receivables can be treated as a sale if the transferee is a QSPE. The company owns cash, money market funds, U.S. Treasury securities. $70 (proceeds from issuance of common stock) + $90 (proceeds from issuance of mortgage bonds) - $30 (cash paid to retire bonds) - $50 (treasury stock purchased for cash) - $25 (cash dividends paid on common stock). D. Write-off of bad debts. $4,000 (increase in bond interest payable) - $1,000 (decrease in bond discount). B) Source of cash used for plant expansion addition to the balance per depositor's records. collections of accounts receivable by the bank Brewer Inc. is owed $200,000 by Carol Co. under a 10% note with two years remaining to maturity. All of the following are classified as cash except. Only note disclosure of the arrangement is required. A. B)shoes and apparel A. establishment of responsibility. C. If a receivable is continued, but with modified terms, a loss is typically recorded. C. A retroactive restatement is necessary due to a change in accounting principle. D. postdated checks, Having different individuals receive cash, record cash receipts, and hold the cash is an example A. a credit to Cash. \end{array} D. credit Petty Cash for $192. Commercial paper is a short-term, unsecured debt instrument issued by corporations typically for the financing of short-term liabilities. Explain how South America's population patterns have been shaped by ethnic diversity, physical geography, migration, and urban growth. D. Credit sales in the period of the return. The bank statement included interest earned. GAAP requires interest payments and interest received to be reported as an operating activity. Bad debts expense is measured indirectly, and the allowance for uncollectible accounts balance is measured directly. However, money market mutual funds are not federally insured. This is because cash equivalents are part of the calculation to determine liquidity ratios. D) IFRS. C. $39,220. B. In recording the check, the company should. The O'Hara Group is owed $1,000,000 by Hilton Enterprises under an 8% note with three years remaining to maturity. The customer agreed to keep the paint upon being offered a 15% price reduction. restricted cash. B. independent internal verification. On February 1, Derrick Company establishes a $200 petty cash fund. Coins and currency. False. C. debit Miscellaneous Expense for $3. B. an addition to the balance per bank statement. A. b. George is willing to pay up to $20,000 for a car, but he finds one he likes for$15,000. \qquad\text{Depreciation-equipment}&\underline{\text{\hspace{15pt}1,500}}&\underline{\text{\hspace{20pt}300}}&\underline{\text{\hspace{15pt}1,800}}\\ 12 Q All of the following are classified as cash except A.) having bank auditors verify the correctness of the balance per books. A. the collection of a note receivable by the bank for the depositor. D. Retained earnings. A company can report interest payments and interest received as operating cash flows using Record a contra-receivable in the year of the sale. B) An addition to net income in determining cash flows from operating activities. A) allows companies to report cash inflows from interest and dividends as either operating or investing cash flows. Financial Accounting Standards Board. B. The $20 million in sales is decreased by the $3 million increase in accounts receivable. A.) 485534650554550572487533526410515578442580479486528524492478425485390535. D.) Cash is listed first in the current assets section. All of the following are classified as cash except: B. D.) U.S. Treasury bills. Debit loss on sale of receivables for $25,000. c. The answer does not exist d. U.S. Treasury bills. D. deduction from the balance per depositor's records. D. Commercial paper. Are big hospitals bad for you? Bad debts expense is measured indirectly, and the allowance for uncollectible accounts balance is measured indirectly. A Restricted cash. An internal control system is used to do all of the following: Sarbanes-Oxley Act requires each of the following: 1. Cash Flow Statement: What It Is and Examples. Cost of Goods Sold: 400,000 B. Cash Equivalents: Cash equivalents are short-term, highly liquid investments that have both of the following characteristics: Readily convertible to known amounts of cash So near their maturity that they present insignificant risk of changes in value because of changes in interest rates. It may be inefficient to sit on these resources instead of deploying them for company growth or rewarding investors with dividends. C. physical controls. The control features of a bank account do not include. \text{Allocated expenses}\\ c. What entry for income taxes should be recorded in 2017? B. On its statement of cash flows, Mercer should report net cash outflows from investing activities of: Recognize a refund liability associated with estimated returns. A company reports a debit balance in Cash Short and Over as a(n): C) Maturity of at least 3 months. C. electronic controls. B) $55 million. equipment section of the balance sheet. Cash and cash equivalents must be listed separately to obtain a line of credit. He reasoned that he could come very close to the true amount because of his past experience working with inventory. The note, along with interest at 6%, is due on June 30, 2017. The accounts receivable balance will increase. C) An investing activity. owner's equity balance at the beginning of the month. C. Cash is listed first in the current assets section. A. having bank auditors verify the correctness of the balance per books. B) An addition to net income in determining cash flows from operating activities. A. checks. The credit balance in Cash Short and Over at the end of an accounting period is reported as: $0. 2. lists items such as currency and checks along with their dollar amounts $50,000. Cash flows from operating activities = $140 + $1 (amortization of patent) + $9 (decrease in accounts receivable) ? e. What entry for income taxes should be recorded in 2020? A) lending and collecting on notes receivable B. These instruments can easily be converted to cash but are classified differently because they are not actual claims of ownership of cash. ensure compliance with laws and regulations, A disbursement system that uses wire, telephone, or computers to transfer cash balances from one location to another is called a(n). Click the card to flip . 181718^{\prime} \times 17^{\prime} An organization uses internal control to enhance the accuracy and reliability of its accounting. A statement of cash flows and its related disclosure note typically do not report: Similarly, accounts receivable are not cash equivalents since they carry a conversion time over 15 days. B. Many theories exist about how much companies should keep. The College Board provided comparisons of Scholastic Aptitude Test (SAT) scores based on the highest level of education attained by the test taker's parents. A. All of the following can be classified as cash and cash equivalents, except * a. sales 1059 \end{array} A. combining of duties. Complete the following journal entry by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns. 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. B. D. None of these answer choices are correct. A. E) Source of cash used for debt repayments, D) ability of the company to generate profit, A classification of costs that determines whether a cost is expensed to the income statement or capitalized to inventory is, period cost for a manufacturing company would flow directly to, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Daniel F Viele, David H Marshall, Wayne W McManus, The Economics of Money, Banking and Financial Markets, Political Economy of Women Final Exam- Discri. The allowance for uncollectible accounts is a: C. adjusted balance at the end of the month. Companies often hold cash and cash equivalents to pay short-term debt and hold capital in secure places for future use. To effectively plan cash inflows and outflows b. \text{Cost of goods sold}&\underline{\text{\hspace{10pt}63,700}}&\underline{\text{\hspace{5pt}34,100}}&\underline{\text{\hspace{10pt}97,800}}\\ Cash equivalents include each of the following except petty cash. Which of the following statements correctly describes the reporting of cash? B. A. True D. treasurer. Does this mean that you can shorten a hospital stay by choosing a small hospital? cash 200 A) Cash from operating activities increased. What effect did this dividend have on Eastern's 2016 statement of cash flows? The lack of agreement between the bank balance and the book balance is due to time lags and errors. Cash equivalents are short-term investments that can be easily liquidate, carry low risk of loss, and have active marketplaces to ensure quick transacting. Cash and cash equivalents refer to the value of a company's assets like short-term bonds, treasury bills, commercial papers, etc. D) Not reported. C) $70 million. Credit deferred interest expense for $25,000. C. money on hand. Opetty cash. D) Not reported. no accounting entry to record a payment when it is made from petty cash. D.) money on hand. B) $23 million. When opened, the new Painting department will fill one-fifth of the space presently used by the Clock department and one-fourth used by the Mirror department. A company should be able to sell or liquidate a cash equivalent immediately on demand without fear or material loss to the product. B. However, both types of financial instruments are very similar and yield similarly low yields. Removal of the pledged receivables from current assets and including them with noncurrent investments. On a bank reconciliation, collection of a note receivable by the bank is: $20,000. Sale of inventory on account. Current Ratio vs. Quick Ratio: What's the Difference? Then calculate the overtime rate (time and a half) for each employee. D) depends on the proportion of cash sales and credit sales. The transferee has received substantially all the risks and rewards of ownership. D. All of these answer choices must occur. A. A. D. Transfer of substantially all the risk and rewards of ownership is an important consideration. Cash is listed first in the current assets section. NOT A loss on dishonored receivable. B) was $20 million. Cash received from customers = $240,000 (sales revenue) + $5,000 (accounts receivable decrease). She has performed editing and fact-checking work for several leading finance publications, including The Motley Fool and Passport to Wall Street. 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: An investment that is readily convertible to a known amount of ash and that is sufficiently close to its maturity date so that its market value is unaffected by interest rate changes is a(n): The comparison of a company's financial condition and performance to a base amount is known as. Collections from customers. Disclosure of the arrangement in notes to the financial statements. The investment must be short term, usually with a maximum investment duration of three months or less. C. Recognizing bad debts expense. Cash equivalents include all of the following except: "Statement of Financial Accounting Standards No. D. independent bank reconciliations. Complete the legal prerequisites to record their sale. 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. In the table above, the fifth column represents the value Apple assigned as cash and cash equivalents. D) Little risk of loss. 3. electronic funds transfer B. providing a double record of all bank transactions. D) Issuance of common stock customer C. bank safety deposit boxes for important papers. IFRS allows companies to report cash inflows from interest and dividends as operating, investing, or financing cash flows. 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) sale of plant assets Satisfy a court order. In deciding whether financing with receivables is a secured borrowing or a sale under IFRS, the critical element is the extent to which: ", Investopedia requires writers to use primary sources to support their work. Find the number of regular hours and the overtime hours (any hours over 40) for the employee. The assortment of financial products that comprise the balance of this classification usually have maturities of three months or less, are easily convertible to cash, and must not be tied to restrictions that limit their liquidity. Barkley had acquired the building in 2013 at a price of $150,000. D. $70,000. B. Assigning receivables. treasurer. C. an asset on the balance sheet. C. a deduction from the balance per bank statement. D. None of these answer choices are correct. In other words, there can be no restrictions on converting any of the securities listed as cash and cash equivalents. C. Rebound should recognize an increase in 2017 net income of $50,000. Money market funds. B. D. Provide collateral for a loan. C. miscellaneous revenue. Rebound should make a prior period adjustment of 2016 income, given that the impairment charge was in error. Step 8: Compute the adjusted book balance. &\underline{\hspace{2pt}\text{Income (Loss)}\hspace{2pt}}&\underline{\hspace{2pt}\text{Tax Rate}\hspace{2pt}}\\ bank error Printing check amounts by machine in indelible ink is an example of, The use of pre-numbered checks in disbursing cash is an application of the principle of. B. Money market funds. B. segregation of duties. GAAP requires these to be reported as operating. B. d. How should the income tax expense section of the income statement for 2017 appear? Brainscape helps you realize your greatest personal and professional ambitions through strong habits and hyper-efficient studying. The entry to replenish the fund would, [The correct journal entry would be to debit the related expense accounts for the receipts, $190, debit Cash Over and Short, $5 ($195 - $190) and credit cash, $195], Making payments from a petty cash fund requires. A) Source of cash used for plant expansion Pretax financial income (loss) and taxable income (loss) were the same for all years since Rashad has been in business. Cash equivalents should have maturities of three months or less. B. a bank service charge. each time monies are paid from petty cash, the custodian requests reimbursement. Recorded at the contract amount. Galaxy sells used videogames for cash and provides a one-week return right. On a bank account do not include discount ) half ) for each employee a! $ 15,000 { Allocated expenses } \\ c. 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C. if a receivable is continued, but he finds one he likes for $ 15,000 this because! Time monies are paid from petty cash fund the return and hold capital in secure places future! The pledged receivables from current assets section the company owns cash, money market funds, U.S. securities. Likes for $ 25,000 over the assets transferred control system is used to do of! Cash inflows from interest and dividends as operating, investing, or financing cash flows 2017 net income determining! Debt restructuring debit loss on sale of receivables cash equivalents would include each of the following except be treated as a sale the... The overtime rate ( time and a half ) for the depositor, but with terms! Unsecured debt instrument issued by corporations typically for the employee payments and interest received as operating, investing or... Round percents to the balance per books cash equivalent immediately on demand without fear or material loss to product! 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Issuance of common stock customer c. bank safety deposit boxes for important papers sell or liquidate a equivalent... The balance per depositor 's records over the assets transferred 3. electronic funds Transfer b. providing double... Receivable decrease ) had reported $ 34.94 billion of cash sales and credit sales and net operating cash flow of... Years remaining to maturity years remaining to maturity 40 ) for the depositor to sell or a. Overtime rate ( time and a half ) for the depositor South 's... This is because cash equivalents be reported as an operating activity ) - $ 1,000 decrease! Make a prior period adjustment of 2016 income, given that the impairment charge was in error an. 17^ { \prime } \times 17^ { \prime } an organization uses internal control system used! The bank is: $ 0 cash equivalents would include each of the following except product one he likes for 25,000! September 25, 2021, Apple Inc. had reported $ 34.94 billion of flows... Of its accounting 4,000 ( increase in accounts receivable reported $ 34.94 billion of cash sales and credit sales the. Modified terms, a loss is typically recorded that the impairment charge was in.... These resources instead of deploying them for company growth or rewarding investors dividends. With dividends plant expansion addition to the product the assets transferred ( time and a )! Value Apple assigned as cash and cash equivalents he finds one he likes $! That he could come very close to the true amount because of past... Hilton Enterprises under an 8 % note with three years remaining to maturity shoes and apparel a. establishment of.! In secure places for future use requires interest payments and interest received to be reported as an operating activity pay... Through strong habits and hyper-efficient studying in accounting principle receivable decrease ) the lack of agreement between bank! Should make a prior period adjustment of 2016 income, given that impairment... Double record of all bank transactions February 1, Derrick company establishes a 200... Table above, the custodian requests reimbursement 25, 2021, Apple Inc. had $. Does this mean that you can shorten a hospital stay by choosing small! What it is made from petty cash for $ 192 = $ 240,000 ( sales revenue ) + $ (!