A. Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Fundamentals of Financial Management, Concise Edition, Charles T. Horngren, C William Thomas, Walter T. Harrison Jr., Wendy M Tietz, FS 3345 Lecture 8 - Guest Lecture - DV in the. B. 59,500 Cash equivalents include each of the following except bank certificates of deposit. A. Pledging receivables. Restricted cash expected to be used within the next year should be A.reported as a current asset. 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. C. physical, mechanical, and electronic controls. 1. signature card no accounting entry to record a payment when it is made from petty cash. In other words, there can be no restrictions on converting any of the securities listed as cash and cash equivalents. Rebound should make a prior period adjustment of 2016 income, given that the impairment charge was in error. Related information follows: 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. Bad debts expense is measured indirectly, and the allowance for uncollectible accounts balance is measured indirectly. D. Advances to affiliated companies. \qquad\text{Store supplies used}&\text{\hspace{24pt}900}&\text{\hspace{20pt}400}&\text{\hspace{15pt}1,300}\\ The level of sales. B) The purchase of treasury stock. Internal control consists of all the related methods and measures adopted within an organization If Jason underestimates the dollar amount of ending inventory, what effect will it have on net income for the current accounting period? If a receivable is continued, but with modified terms, a loss is typically recorded. Cash and Cash Equivalents Definition. D) designates cash outflows for interest payments and cash inflows from interest and dividends received as operating cash flows. B. A. automated system. False, Cash is the asset most susceptible to improper diversion and use. D. Cash equivalents are listed under compensating balance on the balance sheet. C.) money orders. The United Nations Development Programme regularly releases its Human Development Report. Credit factored accounts receivable for $85,000. Money market funds. Cash equivalents are certificates of deposit, money market funds, short-term government bonds, and treasury bills. Cash is obviously direct ownership of money, while cash equivalents represent ownership of a financial instrument that often ties to a claim to cash. High grade marketable equity securities. Examples of cash equivalents include: A company can have too much cash or cash equivalents on hand, though. A company's investment in receivables is influenced by several variables, including: Decrease in accounts receivable, $9 million The age of the receivables transferred differs from the average age of the receivables. D. Write-off of bad debts. 21 - The Statement of Cash Flows Revisited. No changes for those departments gross profit percents or their direct expenses are expected except for store supplies used, which will increase in proportion to sales. B. bank certificates of deposit. cash over and short 1 Add the deposits in transit of $3,000 and subtract the outstanding checks of $4,000 to determine the ending balance of $25,960. Accounts Receivable, Dec. 31: $47,000 IFRS allows interest and dividends received to be reported as either operating or investing. B. Which of the following is an element of internal control? Not record sales until the right to return has expired. The journal entry that Brewer would make to record this transaction would include a loss on troubled debt restructuring of: C) An investing activity. B. Peecher would debit interest revenue over the life of the note. Cash paid to acquire office equipment: $40 You'll get a detailed solution from a subject matter expert that helps you learn core concepts. However, money market mutual funds are not federally insured. B. The principles of internal control include all of the following except: Commercial papers held and due for repayment in 90 days c. Equity investments d. A bank overdraft. sales 1059 Ireland Corporation obtained a $40,000 note receivable from a customer on June 30, 2016. Drebin Security Systems sold merchandise to a customer in exchange for a $50,000, five-year, noninterest-bearing note when an equivalent loan would carry 10% interest. C. minimizing the amount of cash that must be kept on hand. However, oftentimes cash equivalents do not include equity or stock holdings because they can fluctuate in value. Step 3: Subtract outstanding checks from the bank balance Due to financial difficulties Carol Co. did not pay the prior year's interest. d. How should the income tax expense section of the income statement for 2017 appear? A. interest earned. A study shows that there is a positive correlation between the size of a hospital (measured by its number of beds xxx ) and the median number of days yyy that patients remain in the hospital. For simplicity, the total value of cash on hand includesitems with a similar nature to cash. Cash and cash equivalents area group of assets owned by a company. D. The factoring arrangement needs to be with a consolidated entity to qualify for sale accounting. The allowance for uncollectible accounts is a: On February 1, Derrick Company establishes a $200 petty cash fund. A) $151 million. A. added to the bank balance. Brewer Inc. is owed $200,000 by Carol Co. under a 10% note with two years remaining to maturity. A. There are some exceptions to short-term assets and current assets being classified as cash and cash equivalents. A) Either U.S. GAAP and IFRS. B. debit Petty Cash for $94. High grade marketable equity securities. Cash equivalents include bank accounts and marketable securities such as commercial paper and short-term government bonds. \text{Cost of goods sold}&\underline{\text{\hspace{10pt}63,700}}&\underline{\text{\hspace{5pt}34,100}}&\underline{\text{\hspace{10pt}97,800}}\\ A. A. a. They are used for meeting short-term expenses of investing. A. Multiplying net credit sales by the bad debt experience ratio. B) $169 million. A. deposits made by electronic funds transfer. Cash equivalents should have maturities of three months or less. 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. C. Comply with form and content rules of bankruptcy proceedings. D. safeguarding cash by using a bank as a depository. D. Restricted cash funds cannot be reported as a current asset. postage expense 140 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. D) Issuance of common stock What Are Cash Equivalents? Increase in long-term notes payable, $13 million. Cash flows from operating activities = $140 + $1 (amortization of patent) + $9 (decrease in accounts receivable) ? B.) B. independent internal verification. D. Receivables are never settled outright at the time of a restructuring. Cash equivalents are any short-term investment securities with maturity periods of 90 days or less. C. The credit and collection policies. Internal control over cash disbursements is more effective when companies pay by check, rather than by cash. 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. When you use an aging schedule approach for estimating uncollectible accounts: B. money orders. The overall mean SAT math score was 514. Which of the following is not true regarding accounting for transfers of receivables under IFRS? D) Notes payable issued for a tract of land. Some terms may not be used. C. Net income is likely to decline. Will prevent fraud from occurring. C. a debit to various expense accounts. It expects the Painting department to increase total office department expenses by$7,000. dividing accounts receivable by net credit sales and multiplying by 365. Many theories exist about how much companies should keep. Cash Equivalents Explained. Cash accounts include loans made to customers, but not to related parties. In other words, there is very little risk of collecting the full amount being reported. D. None of these answer choices are correct. B. e. money market funds. Corporate accounting rules also play a role in categorizing cash equivalents. B) $55 million. As such, the petty cash fund is over by $1. How do constituents requests help members of Congress perform their jobs? Cash equivalents include each of the following except Select one: a. petty cash. D. Was motivated by the Enron scandal. Restricted cash. Transfers of receivables sometimes are treated as a secured borrowing. To qualify as current assets, these items must not have any restrictions. Cash and cash equivalents must be listed separately to obtain a line of credit. Financial Accounting Standards Board. C) $171 million. C. The transferor of the receivable surrenders control over the assets transferred. A company can report interest received and dividends received as investing activities using Journal entries are required by the depositor for all of the following except: \text{Total expense}&\underline{\text{\hspace{10pt}43,720}}&\underline{\text{\hspace{11pt}17,880}}&\underline{\text{\hspace{10pt}61,600}}\\ Sale of preferred stock for cash, $17 million. D) IFRS. The journal entry that O'Hara would make to record this transaction would include a loss on troubled debt restructuring of: A. Commercial paper. \text{2019}&105,000&20\\ A) A deduction from net income in determining cash flows from operating activities. A. D. Transfer of substantially all the risk and rewards of ownership is an important consideration. 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. b. George is willing to pay up to $20,000 for a car, but he finds one he likes for$15,000. C. Cash is listed first in the current assets section. D. A company may invest its highly liquid cash in order to earn interest; these investments are Current Ratio vs. Quick Ratio: What's the Difference? A petty cash fund of $200 is replenished when the fund contains $5 in cash and receipts of $190. \text{2016}&(150,000)&20\\ features of a job costing system include all but which of the following: The appropriate section in the statement of cash flows for reporting the receipt of cash dividends from investments in securities is: Typical cash flows from investing activities include each of the following except: C) proceed from collecting the principal amount of AR arising from customer sales, The cost of workers who assist in or supervise the manufacturing process, not linked to specific units of product is called, For product cost associated with a particular product to be reported on the income statement, A job order costing system would best fit the needs of a company that makes D. deducted from the book balance. C.) Commercial paper. The principles of internal control do not include, A. management responsibility. Enterprise Value (EV) Formula and What It Means, Statement of Financial Accounting Standards No. C & =0.7 Y+100 \\ C. debit Miscellaneous Expense for $3. Which of the following is FALSE about the Sarbanes-Oxley Act of 2002? On a bank reconciliation, outstanding checks are: The company's bank reconciliation at June 30 included interest earned in the amount of $150. Prepare journal entries to record the issuance of capital stock in each of the following independent cases. A research hypothesis was that students whose parents had attained a higher level of education would on average score higher on the SAT. Cash equivalents include all of the following except. 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. B) IFRS. In deciding whether financing with receivables is a secured borrowing or a sale under IFRS, the critical element is the extent to which: Present value of future cash receipts. Cash equivalents are securities maturing within 90 days or less and include commercial paper, money market funds, and U.S. Treasury bills. Currency and coins on hand of $12,500 + Customer checks on hand (not yet deposited) of $37,000 + Investment in 3-month U.S. Treasury bills of $10,000 = Total cash and cash equivalents of $59,500. Net Sales: 850,000 D) $105 million. This The Sales account is credited for $1,059, the actual amount of the sales for the day, and the Cash Over and Short account is debited for $9, which is the shortage (or difference between the two amounts). Companies often hold cash and cash equivalents to pay short-term debt and hold capital in secure places for future use. Disclosure of the arrangement in notes to the financial statements. item would be included on the bank reconciliation as: Cash and cash equivalents comprise cash on hand and demand deposits, together with short-term, highly liquid investments that are readily convertible to a known amount of cash, and that are subject to an insignificant risk of changes in value. IFRS defines cash equivalents as short-term, highly liquid investments that are readily convertible to known amounts of cash. In a statement of cash flows (indirect method), an increase in available-for-sale securities should be reported as: O commercial paper. What Is a Liquid Asset, and What Are Some Examples? B) Neither U.S. GAAP and IFRS. B. A) was $17 million. C) An investing activity. Cash and cash equivalents may have different insurance coverage. The unadjusted bank balance was $26,960. D. $36,820. All of the following are examples of cash except: Meredith Company's records reflected the following as of September 30: Mild Max would debit: A. 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) Stock dividends. C. Debit discount on liability for $25,000. Which of the following is not a result of the Sarbanes-Oxley Act? D) $182 million. C. bank errors. Loans to employees. D. $70,000. On a bank reconciliation, collection of a note receivable by the bank is: \end{array} Cash interest paid to bondhodlers: $35 A) A deduction from net income in determining cash flows from operating activities. Money market funds. A depositor issued a check for $195 in payment of a voucher that was recorded in the journal as D. None of these answer choices are correct. 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. 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. Cash equivalents often have slightly greater yields than cash. A. C) $38 million. False, A bank issues a debit memorandum when it collects a note receivable for a depositor. A. money market funds. 12 Q All of the following are classified as cash except A.) This may take the form of physical cash (bills and coins) or digital cash (i.e. $20,000. Selected information from Phillips Corporation's accounting records and financial statements for 2016 is as follows ($ in millions): The transferee has received substantially all the risks and rewards of ownership. Which of the following is true with respect to the current period (all else equal)? D. Debit loss on sale of receivables for $25,000. The difference between cash and cash equivalents is minimal. A. establishment of responsibility. Accounts Receivable, Jan. 1: $52,000 During 2016, Eastern received a $50 million cash dividend from Southern. Cash cannot be combined with cash equivalents. OU.S. \text{Direct expenses}\\ Cash and cash equivalents are the most liquid current assets on a company's balance sheet. Accounts Receivable, 12/31/19: 125,000 D. Accounted for on the installment basis. Issued 7,000 shares of common stock on May 1 to acquire a factory building from Barkley Company. A. combining of duties. D. Bad debts expense is measured directly, and the allowance for uncollectible accounts balance is measured indirectly. a deduction from the balance per depositor's records. You can learn more about the standards we follow in producing accurate, unbiased content in our. A. A. The customer agreed to keep the paint upon being offered a 15% price reduction. Step 6: Add any unrecorded interest earned to the book balance. Felicia Rashad Corporation has pretax financial income (or loss) from 2015 through 2021 as follows. C. Dishonored note expense. \qquad\text{Depreciation-equipment}&\underline{\text{\hspace{15pt}1,500}}&\underline{\text{\hspace{20pt}300}}&\underline{\text{\hspace{15pt}1,800}}\\ The work of one person acts as a check on another person to prevent fraud and errors. Meanwhile, cash often receives lower rates of interest in deposit accounts. C. Recorded at an amount equal to the future cash flows. Amortization of patent, $1 million. \text{2020}&(60,000)&25\\ In a statement of cash flows (indirect method), a decrease in inventory should be reported as: Recorded at the contract amount. A. Peecher would credit a discount on note receivable when recording the sale. Types, Features, Examples, Commercial Paper: Definition, Advantages, and Example, Current Ratio Explained With Formula and Examples, Quick Ratio Formula With Examples, Pros and Cons. Oftentimes, financial institutions will allow the CD holder to break their financial product in exchange for a forfeiture of interest (i.e. Enterprise value (EV) is a measure of a company's total value, often used as a comprehensive alternative to equity market capitalization that includes debt. A loss on dishonored receivable. C. U.S. Treasury bills. D. bank service charges. B. \qquad\text{Share of office department expenses}&\underline{\text{\hspace{10pt}10,500}}&\underline{\text{\hspace{15pt}4,500}}&\underline{\text{\hspace{10pt}15,000}}\\ A. cash balance according to the bank statement. cash 150 You'll get a detailed solution from a subject matter expert that helps you learn core concepts. The present value of $50,000 using a 10% interest rate. "Statement of Financial Accounting Standards No. A. establishment of responsibility. B. segregation of duties. D. independent internal verification. The prior year of interest was unpaid. B) Highly liquid. Ariel Courage is an experienced editor, researcher, and former fact-checker. B) sale of short-term investments other than cash equivalents C) sale of plant assets U.S. treasury bills. C. Bad debts expense. CGIXM=0.7Y+100=50=30=80=0.1Y+50. A disbursement system that uses wire, telephone, or computers to transfer cash balances from one C. adjusted balance at the end of the month. Peecher would credit a discount on note receivable when recording the sale. X & =80 \\ A. B Zero. In recording the check, the company should. B. 2. lists items such as currency and checks along with their dollar amounts "Accounting for Digital Assets: Key Considerations. outstanding checks, Step 1: Enter the bank statement balance from the bank statement The adjusted bank and book balance is: 25960 True Current assets must include cash and its equivalents. Cash is money in the form of currency, which includes all bills, coins, and currency notes. D. independent bank reconciliations. \text{2015}&\$48,000&25\%\\ \text{Sales}&\text{\$130,000}&\text{\$55,000}&\text{\$185,000}\\ restricted cash. Petty cash. The control features of a bank account do not include: having bank auditors verify the correctness of the bank balance per books. D) IFRS. D.) Cash is listed first in the current assets section. cash 200 \end{array} This is because cash equivalents are part of the calculation to determine liquidity ratios. Accounts receivable. A grocery store that usually charges $7/pound for beef is willing to lower the price to$5/pound when a huge shipment comes in. E) Cement, investing activities do not include Companies holding more than one currency can experience currency exchange risk. Restricted cash funds may be combined with Cash. Cash equivalents include each of the following except petty cash. 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 . Overdrafts typically cannot be offset against positive balance in other cash accounts on the balance sheet. Step 7: Subtract bank fees from the book balance A statement of cash flows and its related disclosure note typically do not report: 2. A) paint What Are Cash and Cash Equivalents (CCE)? A. A. A petty cash fund is a small sum of company money that is frequently kept on hand. All demand account balances as of the date of the financial statements are included in cash totals. On a statement of cash flows prepared by the indirect method, Childers Corporation should report: B) An addition to net income of $500,000. A. liability. C.) money orders. Gain from the sale of land and buildings: $26 petty cash 200 \qquad\text{Rent expense}&\text{\hspace{15pt}7,020}&\text{\hspace{10pt}3,780}&\text{\hspace{10pt}10,800}\\ In 2017 Rebound was pleased to determine that more cash flows would be received from the receivable than was previously thought, such that, if the total impairment were to be calculated in 2017, it would be estimated as $150,000 rather than $200,000. Assume a company has been maintaining a receivables factoring program for the past five years and has been experiencing the same level of sales, factoring, and bad debts over that period. C. Deferred revenue account. Financial instruments are defined as cash equivalents if they are highly liquid products that have active marketplaces, are without liquidation restrictions, and are easily convertible to cash. Cash paid for bond interest = $400,000 (interest expense) ? A restricted cash 13 Q Three of the most common tools of financial analysis are: Horizontal analysis, vertical analysis, ratio analysis, The comparison of a company's financial condition and performance across time is known as, products that are in the process of being manufactured but are not yet complete are called, The ability to meet short-term obligations and to efficiently generate revenues is called. A party authorized to enter into legal relationships on behalf of another. recordkeeper Companies use a petty cash fund to pay relatively small amounts. Why? the last six months of interest is foregone). C. Recognizing bad debts expense. Accounts Receivable, 1/1/19: $75,000 All of the following would involve a debit memorandum except. B. an NSF check. NOT Which of the following statements correctly describes the reporting of cash? The note, along with interest at 6%, is due on June 30, 2017. B. proceeds for a loan made to the company by the bank. A.) A. A. establishment of responsibility. D. All of these answer choices are correct. Consistent with U.S. GAAP, IFRS classifies cash flows as operating, investing, or financing. Cash flow from operations may increase. The value of the cash equivalents must not be expected to change significantly before redemption or maturity. C) An investing activity. Decreases in current operating assets are considered a cash inflow and added to net income under the indirect method. The transferor is considered to have surrendered control over its receivables if: Determine the equilibrium level of national income. D. $220,000. Which of the following control activities is relevant when a company uses a computerized (rather than manual) accounting system? Control is most effective when two people are responsible for a given task. A. Cash equivalents in accounting are the current assets appearing in any business's balance sheet that are liquid. ", Investopedia requires writers to use primary sources to support their work. See Answer C. the money obtained from cashing a petty cash check is given to the custodian. The records of Mary's Shoes included the following information: C. independent internal verification. B. \textbf{Department Income Statements} Bad debts expense is measured indirectly, and the allowance for uncollectible accounts balance is measured directly. In recording the benefits of a loss carryforward, assume that it is more likely than not that the related benefits will be realized. A. Cash cannot be combined with cash equivalents. Permitting only designated personnel to handle cash receipts is an application of the principle of: The use of pre-numbered checks in disbursing cash is an application of the principle of: A company writes a check to replenish a $100 petty cash fund when the fund contains receipts of. Cash equivalents include all of the following except A.) B. segregation of duties. Restricted cash.

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