Chapter 4
What are investing activities?
buying and selling assets
What is an invoice?
A form describing the goods or services sold, the quantity, the price, and the terms of sale
What is a trade discount?
A reduction of the listed price for the service/good
In a bank reconciliation, the electronic funds transfer (EFT) received by the bank from a customer's note receivable owed to the company is ______.
Added to the company's cash balance
Adrian Corp. sells goods on account for $100,000 on May 1. On May 15, the customer returns $40,000 of the merchandise. The customer has not yet paid for any of the goods. What will Adrian record on May 15?
Credit - accounts receivable Debit - Sale returns
Largo Corp. discovered $2,000 for an NSF check in its bank reconciliation. When the cash account is updated for items that affect the company's cash balance, the entry will include
Credit to cash for $2,000
Because cash normally is assumed to be available for spending, it is usually classified on the balance sheet as a(n)______ ________
Current Asset
Warner Corp. sells goods on account for $10,000 on April 2. On April 20, the customer returns $3,000 of the merchandise. The customer has not yet paid for any of the goods. What is the entry Warner will make on April 20 when the goods are returned?
Debit Sales Returns; credit Accounts Receivable.
In a bank reconciliation, an outstanding check is ______.
Deducted from the bank balance
A $250 bank deposit made on the last day of the month did not appear on this month's bank statement. How would this item be treated on the bank reconciliation?
It would be added to the bank balance
This month's bank statement shows that the bank incorrectly credited ABC Corp.'s account for a $600 deposit that should have been credited to XYZ Corp.'s account. How would this item be treated on ABC's bank reconciliation?
It would be deducted from the bank balance.
Glasser Corp. provided $20,000 of services on account. The account that should be credited is
Service revenue
What is a cash equivalent?
Short term, highly liquid investments which are readily convertible into known amounts of cash
What is a credit sale?
Transfer goods/services to customers, knowing they will get payed in the future
Which of the following steps are necessary to reconcile the bank balance and the cash account balance.
Update banks balance Update company's cash balance Record items to reconcile the company's cash balance
Flounder Corp. provided $12,000 of services on account. The entry to record this transaction would include a debit to____
accounts receivable
In a bank reconciliation, a deposit outstanding is ___
added to the bank balance
In a bank reconciliation, a deposit outstanding is
added to the bank balance.
In a bank reconciliation, interest revenue earned on a company's bank account is:
added to the company's cash balance
To record an estimate for future bad debts at the end of the period, an adjustment would be made with a credit to
allowance for uncollectible accounts
What is bad debt expense?
an expense account to record losses from extending credit
The journal entry to record bad debt expense includes:
credit to allowance for uncollectible accounts debit to bad debt expense
In a bank reconciliation, an outstanding check is _____
deducted from the bank balance
In a bank reconciliation, the bank's charge of $10 for checking account fees is
deducting the company's cash balance
The amount of cash in the balance sheet reflects the
ending cash on the balance sheet date
A trade discount is a reduction from the list price, which is used to:
give quantity discounts to customers disguise real prices from competitors change prices without publishing a new catalog
What is a Bank Reconciliation?
matching the balance of cash in the bank account with the balance of cash in the company's own records
What are operating activities?
transactions that relate to the primary operations of the company
What are financing activities?
transactions the company has with investors and creditors
