Question 1

Which board(s) has(have) worked to implement fair value measurement for financial instruments?
A)FASB, but not IASB.
B)IASB, but not FASB.
C)both FASB and IASB.
D)neither FASB nor IASB.

Accepted Answer

Both FASB and IASB have worked to implement fair value measurement for financial instruments. FASB issued Accounting Standards Codification Topic 820, Fair Value Measurement, and IASB issued IFRS 13, Fair Value Measurement, both of which provide guidance on how to measure fair value for financial instruments.

Question 2

IFRS requires loans and receivables to be recorded at
A)amortized cost.
B)amortized cost, adjusted for allowances for doubtful accounts.
C)unamortized cost.
D)unamortized cost, adjusted for allowances for doubtful accounts.

Accepted Answer

The answer of IFRS requires loans and receivables to be...

Question 3

Which is part of IFRS accounting for financial instruments?

Accepted Answer

The answer of Which is part of IFRS accounting for...

Question 4

If a company sells its accounts receivables to a factor
A)the seller pays a commission to the factor.
B)the factor pays a commission to the seller.
C)there is a gain on the sale of the receivables.
D)the seller defers recognition of sales revenue until the account is collected.

Accepted Answer

When a company sells its accounts receivables to a factor, the seller typically pays a commission to the factor for this service. The factor then takes on the responsibility of collecting the receivables.

Question 5

Schofield Retailers accepted $40,000 of Silver Bank MasterCard credit card charges for merchandise sold on August 1. Silver Bank charges 4% for its credit card use. The entry to record this transaction by Schofield Retailers will include a credit to Sales Revenue of $40,000 and a debit(s) to
A)Cash for $38,400 and Service Charge Expense for $1,600.
B)Accounts receivable for $38,400 and Service Charge Expense for $2,400.
C)Cash for $40,000.
D)Accounts Receivable for $40,000.

Accepted Answer

The credit card charges will be deposited into the Schofield Retailers' bank account, which will be recorded as a debit to Cash. However, since Silver Bank charges a 4% fee for its credit card usage, Schofield Retailers will only receive $38,400 ($40,000 x 0.96). Therefore, the entry will include a debit to Cash for $38,400. Additionally, the 4% fee charged by Silver Bank is an expense to Schofield Retailers, which will be recorded as a separate debit to Service Charge Expense for $1,600 ($40,000 x 0.04). The credit portion of the entry will be a credit to Sales Revenue for $40,000. Therefore, the correct entry will be:
Debit: Cash - $38,400; Service Charge Expense - $1,600
Credit: Sales Revenue - $40,000

Question 6

Which board(s) has(have) faced bitter opposition when working to implement fair value measurement for financial instruments?
A)FASB, but not IASB.
B)IASB, but not FASB.
C)Both FASB and IASB.
D)Neither FASB nor IASB.

Accepted Answer

Both FASB and IASB have faced bitter opposition when working to implement fair value measurement for financial instruments.

Question 7

On April 5 Donna's Boutique accepted a Visa card for a $750 purchase. Visa charges a 2% service fee. The entry to record this transaction would include a
A)credit to Cash of $735.
B)debit to Cash of $750.
C)debit to Service Charge Expense of $15.
D)credit to Service Charge Expense of $15.

Accepted Answer

The answer of On April 5 Donna's Boutique accepted a...

Question 8

Gipson Furniture factors $700,000 of receivables to Kwik Factors, Inc. Kwik Factors assesses a 3% service charge on the amount of receivables sold. Gipson Furniture factors its receivables regularly with Kwik Factors. What journal entry does Gipson make when factoring these receivables?

Accepted Answer

The answer of Gipson Furniture factors $700,000 of receivables to...

Question 9

A company regularly sells its receivables to a factor who assesses a 2% service charge on the amount of receivables purchased. Which of the following statements is true for the seller of the receivables?
A)The loss section of the income statement will increase each time receivables are sold.
B)The credit to Accounts Receivable is less than the debit to Cash when the accounts are sold.
C)Selling expenses will increase each time accounts are sold.
D)The other expenses section of the income statement will increase each time accounts are sold.

Accepted Answer

The answer of A company regularly sells its receivables to...

Question 10

Which receivables accounting and reporting issue is not essentially the same for IFRS and GAAP?
A)The use of allowance accounts and the allowance method.
B)How to record discounts.
C)How to record factoring.
D)All of these answer choices are essentially the same for IFRS and GAAP.

Accepted Answer

The answer of Which receivables accounting and reporting issue is...

Question 11

IFRS sometimes refers to allowances as
A)revenues.
B)discounts.
C)provisions.
D)reserves.

Accepted Answer

IFRS refers to allowances as provisions, which are recognized for liabilities or losses that are probable and can be reasonably estimated. Allowances are not revenue, discounts, or reserves.

Question 12

Which permits partial derecognition of receivables?

Accepted Answer

The answer of Which permits partial derecognition of receivables? ...

Question 13

Receivables might be sold to
A)lengthen the cash-to-cash operating cycle.
B)take advantage of deep discounts on the cash realizable value of receivables.
C)generate cash quickly.
D)finance companies at an amount greater than cash realizable value.

Accepted Answer

Selling receivables generates cash quickly, which can help improve cash flow and provide funds to finance operations or purchase new assets. Lengthening the cash-to-cash operating cycle would be counterproductive, as it would increase the time between when the company pays for its inventory or supplies and when it receives payment from its customers. Taking advantage of deep discounts on the cash realizable value of receivables and selling them to finance companies at an amount greater than cash realizable value are both unlikely scenarios, as such discounts or premiums are typically only available in specific circumstances and are not a common practice.

Question 14

What criteria are used to determine how to record a factoring transaction?

Accepted Answer

The answer of What criteria are used to determine how...

Question 15

IFRS
A)implies that receivables with different characteristics should be reported separately.
B)requires that receivables with different characteristics should be reported separately.
C)implies that receivables with different characteristics should be reported as one unsegregated amount.
D)requires that receivables with different characteristics should be reported as one unsegregated amount.

Accepted Answer

The answer of IFRS
A)implies that receivables with different characteristics should...

Question 16

The retailer considers Visa and MasterCard sales as
A)cash sales.
B)promissory sales.
C)credit sales.
D)contingent sales.

Accepted Answer

Retailers consider Visa and MasterCard sales as cash sales because the funds are typically deposited into the retailer's account by the card processor within a few days, similar to cash transactions.

Question 17

When customers make purchases with a national credit card, the retailer
A)is responsible for maintaining customer accounts.
B)is not involved in the collection process.
C)absorbs any losses from uncollectible accounts.
D)receives cash equal to the full price of the merchandise sold from the credit card company.

Accepted Answer

When customers make purchases with a national credit card, the retailer is not involved in the collection process. The credit card company handles the collection of payments from customers, relieving the retailer of this responsibility.

Question 18

Which requires a two-tiered approach to test whether the value of loans and receivables are impaired?

Accepted Answer

The answer of Which requires a two-tiered approach to test...

Question 19

A captive finance company refers to
A)a finance company that is owned by individuals who borrow money from the company.
B)finance companies that won't allow early repayment of loans.
C)a company that is wholly owned by another company and provides financing to purchasers of its owner company's goods.
D)any company that issues a major credit card.

Accepted Answer

A captive finance company is a subsidiary of a larger corporation, often a manufacturer or retailer, that provides financing for customers purchasing the company's products. It is owned entirely by the parent company and operates solely to provide financing options for its parent company's customers.

Question 20

Which receivables accounting and reporting issue is essentially the same for IFRS and GAAP?
A)The use of allowance accounts and the allowance method.
B)How to record discounts.
C)How to record factoring.
D)All of these answer choices are essentially the same for IFRS and GAAP.

Accepted Answer

The answer of Which receivables accounting and reporting issue is...

Quiz 7: Reporting and Analyzing Receivables

Which board(s) has(have) worked to implement fair value measurement for financial instruments?

IFRS requires loans and receivables to be recorded at

Which is part of IFRS accounting for financial instruments?

If a company sells its accounts receivables to a factor

Schofield Retailers accepted $40,000 of Silver Bank MasterCard credit card charges for merchandise sold on August 1. Silver Bank charges 4% for its credit card use. The entry to record this transaction by Schofield Retailers will include a credit to Sales Revenue of $40,000 and a debit(s) to

Which board(s) has(have) faced bitter opposition when working to implement fair value measurement for financial instruments?

On April 5 Donna's Boutique accepted a Visa card for a $750 purchase. Visa charges a 2% service fee. The entry to record this transaction would include a

Gipson Furniture factors $700,000 of receivables to Kwik Factors, Inc. Kwik Factors assesses a 3% service charge on the amount of receivables sold. Gipson Furniture factors its receivables regularly with Kwik Factors. What journal entry does Gipson make when factoring these receivables?

A company regularly sells its receivables to a factor who assesses a 2% service charge on the amount of receivables purchased. Which of the following statements is true for the seller of the receivables?

Which receivables accounting and reporting issue is not essentially the same for IFRS and GAAP?

IFRS sometimes refers to allowances as

Which permits partial derecognition of receivables?

Receivables might be sold to

What criteria are used to determine how to record a factoring transaction?

IFRS

The retailer considers Visa and MasterCard sales as

When customers make purchases with a national credit card, the retailer

Which requires a two-tiered approach to test whether the value of loans and receivables are impaired?

A captive finance company refers to

Which receivables accounting and reporting issue is essentially the same for IFRS and GAAP?