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Cash collected & recorded by a company but not yet reflected in a bank statement are known as ___________

deposit in transit

while preparing a bank reconciliation, which of the following items would be added to the bank statement balance?

deposit in transit

Contra accounts

accounts that have a balance that is opposite of the balance in the related account e.g., Accumulated Depreciation account.

If a company uses the direct write-off method of accounting for bad debts, it will record :

(it will record) bad debt expense only when an account is determined to be uncollectedÂ

A customer's check for $25 that had been deposited into the company's checking account the previous month was returned stamped "NSF" by the bank. Which journal entry is required?

Accounts Receivable: $25 Cash: $25

While preparing a bank reconciliation, which of the following items would be subtracted from the balance per company records?

Bank service charges

Debit Memos

Recorded by the bank, but not yet by the business. Causes the bank balance to be less than the cash balance of the business.

Credit Memos

Recorded by the bank, but not yet recorded by the business. Causes the bank balance to be larger than the cash balance for the business.

Permanent accounts

The balance sheet accounts- assets, liabilities, and stockholders' equity

How will the lender of the promissory note record the note on its books?

as an asset

The account which records differences between amounts of cash deposited & amounts from the register tapes is called ___________

cash over & short

A credit memo appeared on the Sept bank statement. How should this amount be treated on the Sept bank reconciliation?

deduct it from the bank balance

Which of the following items would be added to the company's cash balance on a bank reconciliation?

interest earned

According to the Sarbanes-Oxley Act of 2002, who is primarily responsible for establishing & maintaining a system of internal control over the company's financial reporting?

management of the company

What is the distinguishing characteristic between accounts receivable and notes receivable?

notes receivable specify an interest rate and a maturity date at which any interest and principle must be repaid

Example of a debit memo

notice of a bank service charge

Example of a credit memo?

notice of interest earned on a checking account

While preparing a bank reconciliation, what would be subtracted from the balance per bank statement?

outstanding checks

Which allowance method approach is considered to be an income statement approach to establishing bad debts?

percentage of net credit sales

Deferred (or prepaid) expenses

prepayments are recorded as assets

Depreciation

process of allocating the cost of a tangible fixed asset to expense over the assets useful life.

Deferred (or unearned) revenues.

ransactions for which a company has received cash but has not yet earned the revenue

An incentive used by a company to encourage prompt payment is called a ____________

sales discount

What is true regarding the two allowance procedures used to estimate bed debts?

the aging of accounts receivable method takes into account the existing balance in the Allowance for Doubtful Accounts

A reduction in the price granted by the seller for a particular class of customers is called a _____________

trade discount