Question 1

A six-month bill receivable for $6000 at 11%,dated 1 September 2017,has accrued interest revenue of ________ on 31 December 2017.

Accepted Answer

The answer of A six-month bill receivable for $6000 at...

Question 2

What is the maturity value of a 3-month,12% bill for $50,000?

Accepted Answer

Maturity value = Principal + (Principal x Rate x Time)
= $50,000 + ($50,000 x 0.12 x 3/12)
= $50,000 + ($50,000 x 0.03)
= $51,500. 
So, the maturity value of the bill is $51,500. Choice A is the correct answer.

Question 3

On 1 October 2016,Android Ltd made a loan to one of its customers.The customer signed a 4-month note for $100,000 at 13%.How much interest revenue did the company record in the year 2016?

Accepted Answer

Interest revenue for the loan can be calculated using the formula: 
Interest = Principal x Rate x Time
where Principal is $100,000, Rate is 13%, and Time is 3/12 (since the loan was made on October 1, there were only 3 months remaining in the year). 
Therefore, Interest = $100,000 x 13% x 3/12 = $3,250.
Hence, the correct answer is C.

Question 4

Which of the following exists if the maker of a promissory bill fails to pay the bill on the due date?

Accepted Answer

If the maker of a promissory bill fails to pay the bill on the due date, it is considered a dishonoured bill. This means that the bill has not been honored or fulfilled as promised, and the holder of the bill may take legal action to recover the funds owed. A depreciated bill refers to a bill that has decreased in value over time, an amortised bill refers to a bill that is paid off in installments over a period of time, and a discounted bill refers to a bill that has been sold for less than its face value. None of these terms accurately describe a bill that has not been paid on the due date.

Question 5

Assets are listed on the balance sheet in order of liquidity.Which of the following items reflects the normal order of liquidity?

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Question 6

On 1 October 2017,Android Ltd made a loan to one of its customers.The customer signed a 9-month bill for $100,000 at 14%.Calculate the total interest earned on the bill.

Accepted Answer

Using the formula: Interest = Principle x Rate x Time/100
Time is expressed in terms of months, so we have 9/12 = 0.75
Therefore, Interest = $100,000 x 14 x 0.75/100 = $10,500

Question 7

On 1 December 2016,Parsons Ltd sold machinery to a customer for $25,000.The customer could not pay at the time of sale but agreed to pay 11 months later and signed a 11-month bill at 8% interest.What was the total amount of cash collected by Parsons on the maturity of the bill?

Accepted Answer

To find the total amount of cash collected by Parsons on the maturity of the bill, we need to calculate the amount of interest and add it to the original sale price.

= 25,000 x 0.08 x 11/12
 = 1,833.33

The customer will then pay the original sale price plus the interest:

= 25,000 + 1,833.33
= $26,833.33

Therefore, the correct answer is D, $26,833.3333.

Question 8

Which of the following is the party lending funds on a bill?

Accepted Answer

The answer of Which of the following is the party...

Question 9

On 1 October 2016,Android Ltd made a loan to one of its customers.The customer signed a 4-month bill for $140,000 at 15%.Calculate the maturity value of the bill.

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The answer of On 1 October 2016,Android Ltd made a...

Question 10

On 1 January,Ajax Company accepted a one-year bill for $50,000 at 5% from one of its customers.When the bill matured on 31 December,the customer was unable to pay and the company recorded the dishonour.The amount of the debit in the dishonour entry would be:

Accepted Answer

Since the customer was unable to pay the bill, the company would record the face value of the bill as a debit in the dishonour entry, which is $50,000. However, since the bill was accepted at a discounted rate of 5%, the company would also record an additional debit of the discount forfeited, which is calculated as follows:

Discount forfeited = Face value x Rate x Time 
= $50,000 x 5% x 1 year 
= $2,500

Therefore, the total debit in the dishonour entry would be $50,000 (face value) + $2,500 (discount forfeited) = $52,500.

Question 11

The maturity value of a bill is the sum of the principal plus interest due at maturity.

Accepted Answer

The maturity value of a bill is the total amount that needs to be paid at the time of maturity, which includes both the principal and the accrued interest.

Question 12

On 1 December 2016,Parsons Ltd sold machinery to a customer for $20,000.The customer could not pay at the time of sale but agreed to pay 9 months later and signed a 9-month bill at 9% interest.How much interest revenue was earned for the entire term of the bill?

Accepted Answer

The interest revenue earned for the entire term of the bill can be calculated using the simple interest formula,
Interest = (Principal x Rate x Time)/100
Here, the principal is $20,000, the rate is 9% per annum (for 9 months, it will be 9/12 x 9 = 6.75%), and the time is 9/12 years. Plugging in these values,
Interest = ($20,000 x 6.75 x 9/12)/100 = $1350.
Therefore, the correct answer is A) $1350.

Question 13

Which of the following is the party borrowing funds on a bill?

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Question 14

On 1 October 2016,Ealys Jewellers accepted a 4-month,10% bill for $8000 in settlement of an overdue account receivable.The company closes its accounts at the year-end.Calculate and record the accrued interest on the bill at 31 December 2016.

Accepted Answer

The answer of On 1 October 2016,Ealys Jewellers accepted a...

Question 15

On which of the following dates does a three-month bill dated 12 November mature?

Accepted Answer

A three-month bill dated 12 November will mature three months later, which falls on 12 February.

Question 16

What is the maturity value of a bill?

Accepted Answer

The maturity value of a bill is the total amount that must be paid at the end of the bill's term, which includes the principal amount and any interest due. Therefore, the correct answer is C - the principal amount plus interest due.

Question 17

Interest revenue must be reported for a bill receivable that is outstanding at the end of the accounting period.

Accepted Answer

Interest revenue is recognized on the bill receivable that remains outstanding at the end of the accounting period, based on an appropriate interest rate applied to the amount of the bill. This revenue should be reported in the appropriate revenue account on the income statement.

Question 18

A company issues a 100-day,14% bill for $17,000.What is the principal amount of the bill?

Accepted Answer

The answer of A company issues a 100-day,14% bill for...

Question 19

A bill is dishonoured when the debtor of the bill fails to pay the bill at maturity.

Accepted Answer

When a bill is not paid by the debtor at the maturity date, it is considered dishonoured.

Question 20

On 1 October 2016,Android Ltd made a loan to one of its customers.The customer signed a 4-month bill for $130,000 at 13%.How much interest revenue did the company record in the year 2017 for this bill?

Accepted Answer