Accounting Chapter 8 and 9

Net realizable value=

Accounts Receivable/Allowance for Doubtful Accounts

bad debt expense=

Credit sales x bad debt as a percent of credit sales

A business that requires all cash payments be made by check can NOT use a petty cash system. T/F

True

Maturity Value=

[note + (note x % x day / 360) ]

On the bank's accounting records, customers' accounts are normally shown as

a liability

A debit or credit memo describing entries in the company's bank account may be enclosed with the bank statement. An example of a credit memo is

a promissory note left for collection

Following the completion of the bank reconciliation, an adjusting entry was made that debited cash and credited Interest Revenues. Therefore the bank reconciliation must have included an item that was

added to the balance per company's records

A check drawn by a company for $340 in payment of a liability was recorded in the journal as $430. This item would be included on the bank reconciliation as a(n)

addition to the balance per the company's records

Bank Section Reconciliation=

balance per bank + deposit in transit - outstanding checks

Company Section of Reconciliation=

balance per company records - bank services charges - NSF check

A $140 petty cash fund has cash of $20 and receipts of $117. The journal entry to replenish the account would include a credit to

cash of $120

A $135 petty cash fund has cash of $28 and receipts of $110. The journal entry to replenish the account would include a

credit to Cash Over and Short for $3

Receipts from cash sales of $3,200 were recorded incorrectly in the cash receipts journal as $2,300. This item would be included on the bank reconciliation as a(n)

debit cash; credit sales

A $100 petty cash fund contains $91 in petty cash receipts, and $4.75 in currency and coins. The journal entry to record the replenishment of the fund would include a

debit to Cash Short and Over for $4.25

Using the allowance method of accounting for uncollectible receivables, the entry to reinstate a specific receivable previously written off would include a

debit to accounts receivable

A check drawn by a company in payment of a voucher for $965 was recorded in the journal as $695. The item would be included in the bank reconciliation as a(n).

deduction from the balance per the company's records

The two methods for accounting for uncollectible receivables are the allowance method and the

direct write-off method

Interest Revenue=

face amount x interest rate x (term/360)

The reconciliation of the cash register tape with the cash in the register is an example of

independent internal verification

The direct write-off method of accounting for uncollectible accounts

is often used by small companies and companies with few receivable

Cash equivalents include

money market accounts and commercial paper

Accounts Receivable Turnover Ratio=

net credit sales/average net accounts receivable

What entry is required in the company's accounts to record outstanding checks?

none

The objectives of internal control are to

provide reasonable assurance that operations are managed to achieve goals, financial reports are accurate, and laws and regulations are complied with

Which of the following would be deducted from the balance per books on a bank reconciliation?

service charges

A person authorized to write checks drawn on a checking account at a bank must sign and have on file with the bank a

signature card

Notes or accounts receivables that result from sales transactions are often called

trade receivables

A petty cash fund is used to pay relatively large amounts T/F

False

If the allowance method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible?

Allowance for Doubtful Accounts

The balance in Allowance for Doubtful Accounts will directly impact the end of period adjustment for the bas debt expense when using which of the following methods?

Allowance method

ratio of cash to monthly cash expenses

Cash as of Year-End/Monthly Cash Expenses.

What is included with the Cash and Equivalents on the Balance Sheet?

Commercial Paper, Certificates of Deposit, and Money Market Mutual Funds

Beginning Balance of the Cash Account=

Disbursements + ending balance - collections

What influences business's control environment

Management's philosophy and operating style, organizational structure, and personal policies

monthly cash expenses

Negative Cash Flow from Operations / 12.

Paper Company receives a $6,000, 3-month, 6% promissory note from Dame Company in settlement of an open accounts receivable. What entry will Paper Company make upon receiving the note?

Notes Receivable. 6000 Account Receivable-Dame Company. 6000