Question 1

A(n) ____________________ categorizes the various accounts receivable amounts by the length of time outstanding.

Accepted Answer

The answer of A(n) ____________________ categorizes the various accounts receivable...

Question 2

Over the life of a note, the maker of a note recognizes ____________ on the balance sheet and _____________ on the income statement.

Accepted Answer

The answer of Over the life of a note, the...

Question 3

The _______________ the accounts receivable turnover ratio, the quicker the each dollar of accounts receivable can be collected.

Accepted Answer

The answer of The _______________ the accounts receivable turnover ratio,...

Question 4

A company that holds a promissory note from another company has an asset, called a(n) ____________________.

Accepted Answer

The answer of A company that holds a promissory note...

Question 5

The comparative balance sheets of Midnite Corp.for 2017 and 2016 indicate that short-term trade notes receivable increased from $5,000 in 2016 to $75,000 in 2017.How will this change be reported on Midnite's statement of cash flows, if Midnite uses the indirect method?

Accepted Answer

The increase in short-term trade notes receivable represents cash that was not collected from customers during the period. In the indirect method of preparing the statement of cash flows, increases in current assets (other than cash and cash equivalents) are deducted from net income in the operating activities section to reconcile net income to net cash provided by operating activities.

Question 6

Which one of the following is an investing activity on the statement of cash flows?

Accepted Answer

Purchase of long-term investments is an example of an investing activity, which involves the acquisition or disposal of long-term assets such as property, plant, and equipment, or investments in securities such as stocks and bonds. Collection of accounts receivable (A) is an example of an operating activity, as it relates to the collection of revenue from sales. Receipt of interest (C) and dividends (D) are examples of financing activities, as they involve the receipt of income from investments in debt or equity securities.

Question 7

Which of the following statements is true regarding dividend income?

Accepted Answer

Dividend income is reported on the income statement as it represents earnings received by the company from its investments in other companies' stock.

Question 8

What is the impact on the cash flow statement from a decrease in accounts receivable, assuming the indirect method is used?

Accepted Answer

When accounts receivable decreases, it means that less money is expected to be received from customers in the future. This increase in cash inflow from customers results in an increase in cash flow from operating activities on the cash flow statement. Therefore, the correct answer is B.

Question 9

The party that agrees to repay is the ____________________ of the note.

Accepted Answer

The answer of The party that agrees to repay is...

Question 10

The mechanism that keeps track of the balances owed by individual customers is called a(n) _________________________.

Accepted Answer

The answer of The mechanism that keeps track of the...

Question 11

On July 1, 2016, Overlin Corp.purchased $100,000 of 8% bonds at face value.Interest is paid annually on June 30.If the accounting year for Overlin ends at December 31, 2016, what will be reported with respect to the bonds on that date?

Accepted Answer

Since the accounting year for Overlin ends on December 31, 2016, only six months' worth of interest has been accrued on the bonds. This means that Overlin is entitled to receive $4,000 in interest income for the period from July 1, 2016, to December 31, 2016. Choice A is incorrect because the carrying value of the bonds remains at $100,000 until the next interest payment. Choice B is incorrect because Overlin will not have received any cash interest payments by December 31, 2016. Choice D is incorrect because there is no loss on the bonds to be reported until Overlin decides to sell them.

Question 12

What is the impact on the cash flow statement from an increase in short-term notes receivable, assuming the indirect method is used?

Accepted Answer

An increase in short-term notes receivable is recorded as an increase in accounts receivable on the balance sheet. When using the indirect method to prepare the cash flow statement, an increase in accounts receivable is subtracted from net income to calculate the cash flow from operating activities. This is because an increase in accounts receivable indicates that sales were made on credit, but cash has not been received yet. As a result, the cash flow from operating activities decreases.

Question 13

Sweetson Enterprises' comparative balance sheets included accounts receivable of $220,300 at December 31, 2016, and $200,900 at December 31, 2017.Sales reported on Sweetson's 2017 income statement amounted to $2,350,000.What is the amount of cash collections that Sweetson will report in the Operating Activities category of its 2017 statement of cash flows assuming that the direct method is used? ​

Accepted Answer

To calculate cash collections, start with sales and adjust for the change in accounts receivable: $2,350,000 + ($220,300 - $200,900) = $2,350,000 + $19,400 = $2,369,400.

Question 14

A(n) _________________________ is a written promise to repay a definite sum of money either upon demand, or at a fixed or determinable date in the future.

Accepted Answer

The answer of A(n) _________________________ is a written promise to...

Question 15

The accounts receivable turnover ratio is computed by dividing ____________ by average accounts receivable.

Accepted Answer

The answer of The accounts receivable turnover ratio is computed...

Question 16

Which one of the following is not an accurate statement regarding the direct write-off method of accounting for bad debts?

Accepted Answer

The statement that the allowance method violates the matching principle while the direct write-off method does not is not accurate. Both methods have deficiencies in properly matching revenues and expenses, but the allowance method attempts to estimate and record bad debt expense in the period when the related sales are made while the direct write-off method only recognizes bad debt expense when an account is actually written off. Therefore, choice D is not accurate.

Question 17

On February 1, 2016, Vermont Corp.pays $50,000 for shares of Stream, Inc.common stock and another $1,000 in commissions. ​
Assume that Vermont sells the Stream stock on May 20, 2016, for $53,000.In this case, Vermont recognizes

Accepted Answer

Vermont Corp. initially invested $51,000 ($50,000 for shares + $1,000 in commissions) and sold the stock for $53,000, realizing a gain of $2,000. This gain increases both assets (from the sale proceeds) and stockholders' equity (from the realized gain).

Question 18

The comparative balance sheets for Flagler Co.for 2017 and 2016 indicate that accounts receivable decreased during 2017.Flagler uses the indirect method of preparing the operating activities section of its statement of cash flows.How will the decrease in accounts receivable be reported on the statement of cash flows?

Accepted Answer

The decrease in accounts receivable will be reported as an increase in cash in the operating activities section of the statement of cash flows using the indirect method. This is because a decrease in accounts receivable indicates that more cash was collected from customers than was previously expected, resulting in an increase in cash flows from operating activities. The option of deducting the decrease from net income (Choice B) is incorrect as this would result in a lower net income figure which is not accurate. Reporting the decrease in accounts receivable as a cash outflow in the investing activities section (Choice D) is also incorrect as it does not reflect the true nature of the transaction. Choice A is also incorrect as it only reflects the ending balance of cash and not the change in cash during the period.

Question 19

The gross accounts receivable less the allowance for doubtful accounts is known as the _________________________.

Accepted Answer

The answer of The gross accounts receivable less the allowance...

Question 20

A general ledger account that is supported by a subsidiary ledger is called a(n) ____________________.

Accepted Answer

The answer of A general ledger account that is supported...

Quiz 7: Receivables and Investments

A(n) ____________________ categorizes the various accounts receivable amounts by the length of time outstanding.

Over the life of a note, the maker of a note recognizes on the balance sheet and _ on the income statement.

The _______________ the accounts receivable turnover ratio, the quicker the each dollar of accounts receivable can be collected.

A company that holds a promissory note from another company has an asset, called a(n) ____________________.

The comparative balance sheets of Midnite Corp.for 2017 and 2016 indicate that short-term trade notes receivable increased from $5,000 in 2016 to $75,000 in 2017.How will this change be reported on Midnite's statement of cash flows, if Midnite uses the indirect method?

Which one of the following is an investing activity on the statement of cash flows?

Which of the following statements is true regarding dividend income?

What is the impact on the cash flow statement from a decrease in accounts receivable, assuming the indirect method is used?

The party that agrees to repay is the ____________________ of the note.

The mechanism that keeps track of the balances owed by individual customers is called a(n) _________________________.

On July 1, 2016, Overlin Corp.purchased $100,000 of 8% bonds at face value.Interest is paid annually on June 30.If the accounting year for Overlin ends at December 31, 2016, what will be reported with respect to the bonds on that date?

What is the impact on the cash flow statement from an increase in short-term notes receivable, assuming the indirect method is used?

A(n) _________________________ is a written promise to repay a definite sum of money either upon demand, or at a fixed or determinable date in the future.

The accounts receivable turnover ratio is computed by dividing ____________ by average accounts receivable.

Which one of the following is not an accurate statement regarding the direct write-off method of accounting for bad debts?

On February 1, 2016, Vermont Corp.pays $50,000 for shares of Stream, Inc.common stock and another $1,000 in commissions. Assume that Vermont sells the Stream stock on May 20, 2016, for $53,000.In this case, Vermont recognizes

The gross accounts receivable less the allowance for doubtful accounts is known as the _________________________.

A general ledger account that is supported by a subsidiary ledger is called a(n) ____________________.

Quiz 7: Receivables and Investments

A(n) ____________________ categorizes the various accounts receivable amounts by the length of time outstanding.

Over the life of a note, the maker of a note recognizes ____________ on the balance sheet and _____________ on the income statement.

The _______________ the accounts receivable turnover ratio, the quicker the each dollar of accounts receivable can be collected.

A company that holds a promissory note from another company has an asset, called a(n) ____________________.

The comparative balance sheets of Midnite Corp.for 2017 and 2016 indicate that short-term trade notes receivable increased from $5,000 in 2016 to $75,000 in 2017.How will this change be reported on Midnite's statement of cash flows, if Midnite uses the indirect method?

Which one of the following is an investing activity on the statement of cash flows?

Which of the following statements is true regarding dividend income?

What is the impact on the cash flow statement from a decrease in accounts receivable, assuming the indirect method is used?

The party that agrees to repay is the ____________________ of the note.

The mechanism that keeps track of the balances owed by individual customers is called a(n) _________________________.

On July 1, 2016, Overlin Corp.purchased $100,000 of 8% bonds at face value.Interest is paid annually on June 30.If the accounting year for Overlin ends at December 31, 2016, what will be reported with respect to the bonds on that date?

What is the impact on the cash flow statement from an increase in short-term notes receivable, assuming the indirect method is used?

A(n) _________________________ is a written promise to repay a definite sum of money either upon demand, or at a fixed or determinable date in the future.

The accounts receivable turnover ratio is computed by dividing ____________ by average accounts receivable.

Which one of the following is not an accurate statement regarding the direct write-off method of accounting for bad debts?

On February 1, 2016, Vermont Corp.pays $50,000 for shares of Stream, Inc.common stock and another $1,000 in commissions. ​ Assume that Vermont sells the Stream stock on May 20, 2016, for $53,000.In this case, Vermont recognizes

The gross accounts receivable less the allowance for doubtful accounts is known as the _________________________.

A general ledger account that is supported by a subsidiary ledger is called a(n) ____________________.

Over the life of a note, the maker of a note recognizes on the balance sheet and _ on the income statement.

On February 1, 2016, Vermont Corp.pays $50,000 for shares of Stream, Inc.common stock and another $1,000 in commissions. Assume that Vermont sells the Stream stock on May 20, 2016, for $53,000.In this case, Vermont recognizes