Exam 3

The first step in preparing the statement of cash flows is to: determine the cash provided by or used in investing and financing activities. determine the change in cash during the period. reconcile the change in cash with the beginning and the ending cash balances. determine the cash provided by or used in operating activities.

determine the cash provided by or used in operating activities.

The balance sheet is useful for analyzing all of the following except liquidity. financial flexibility. solvency. profitability.

profitability.

On December 31, 2021 Crane Company sold land having an original cost of $122,200 in exchange for the following: $28200 down payment $56400 payable on December 31, 2022 and December 31, 2023 The agreement of sale made no mention of interest; however, 8% would be a fair rate for this type of transaction. What should be the amount of the notes receivable net of the unamortized discount on December 31, 2021 rounded to the nearest dollar? the present value of an ordinary annuity of 1 at 8% for 1 year is 0.92593 the present value of an ordinary annuity of 1 at 8% for 2 years is 1.78326 the present value of a single-sum of 1 at 8% for 1 year is 0.92593 the present value of a single-sum of 1 at 8% for 2 years is 0.85734 $128776. $100576. $217914. $122200.

$100576. the zero-interest bearing note has installment payments of $56,400, and is therefore an annuity. > PVOA = PMT × PVOAF(n=2,i=8%) > PVOA = $56,400 × 1.78326 = $100,576 On Dec. 31, 2021, the note receivable DR would be $122,200 [i.e. $56,400 × 2] and the discount CR would be $21,624 [i.e. $122,200 − $100,576]. The full JE would be: DR. Cash.............................. 28,200 DR. Note Receivable..... 122,200 CR. Discount on N.R.......... 21,624 CR. Land...................................122,200 CR. Gain on disposal..........6,576

Sheridan Company's average collection period is 46 days and its net sales are $2434000. What are Sheridan Company's average accounts receivables for the period? (Use 365 days for calculation. Round intermediate calculations to 1 decimal place, e.g, 5.3.) $205422. $52913. $6698. $308101.

$308101. (net.credit.sales) ÷ (avg.A.R.) = ARTO 365 ÷ ARTO = ADCR 365 ÷ ADCR = ARTO (net.credit.sales) ÷ (avg.A.R.) = ARTO = 365 ÷ ADCR (net.credit.sales) ÷ (avg.A.R.) = 365 ÷ ADCR 2,434,000 ÷ (avg.A.R.) = 365 ÷ 46 days 2,434,000 ÷ (avg.A.R.) = 7.9 2,434,000 × 7.9 = (avg.A.R.) 2,434,000 × 7.9 = 308,101

Wildhorse Company's average collection period is 60 days and its average accounts receivable are $602000. What is the estimated amount of Wildhorse Company's net credit sales for the period? (Use 365 days for calculation. Round turnover to 1 decimal place, e.g. 12.5.) $95103. $98689. $3792600. $3672200.

$3672200. (net.credit.sales) ÷ (avg.A.R.) = ARTO 365 ÷ ARTO = ADCR 365 ÷ ADCR = ARTO (net.credit.sales) ÷ (avg.A.R.) = ARTO = 365 ÷ ADCR (net.credit.sales) ÷ (avg.A.R.) = 365 ÷ ADCR (net.credit.sales) ÷ 602,000 = 365 ÷ 60 days (net.credit.sales) ÷ 602,000 = 6.1 (net.credit.sales) = 6.1 × 602,000 (net.credit.sales) = 3,672,200

Which of the following is included in an owners' equity section reported in the balance sheet? Additional paid-in capital. Dividends. Working capital. Accumulated capital.

Additional paid-in capital.

On a classified balance sheet, which of the following should a company report separately? Assets that differ in their type or expected function. Assets and liabilities with different implications for the company's financial flexibility. Assets and liabilities with different general liquidity characteristics. All of these answer choices are correct.

All of these answer choices are correct.

Which of the following methods of determining annual bad debt expense violates the expense recognition concept? Percentage of average accounts receivable Direct write-off Percentage of ending accounts receivable Percentage of sales

Direct write-off

Which of the following statements regarding the statement of cash flows is incorrect? Due to its format and level of detail, most individuals have difficulty comprehending the information reported in the statement of cash flows. The statement of cash flows presents a detailed summary of all the cash inflows and outflows, or the sources and uses of cash during the period. The income statement, the statement of stockholders' equity, and the balance sheet each present some information about the cash flows of an enterprise during a period. The statement of cash flows reports the following: (1) the cash effects of operations during a period, (2) investing transactions, (3) financing transactions, and (4) the net increase or decrease in cash during the period.

Due to its format and level of detail, most individuals have difficulty comprehending the information reported in the statement of cash flows.

Which of the following pairings of an item and a basis of valuation is incorrect? Cash - Fair value. Short-term investments - Generally Fair value. Prepaid expenses - Cost. Receivables - Lower-of-cost-or-market.

Receivables - Lower-of-cost-or-market.

Which of the following investments should always be reported as current assets? Trading securities. Available-for-sale securities. Long-term investments. Held-to-maturity securities.

Trading securities.

The statement of cash flows provides answers to all of the following questions except What was the change in the cash balance during the period? Where did the cash come from during the period? What is the impact of inflation on the cash balance at the end of the year? What was the cash used for during the period?

What is the impact of inflation on the cash balance at the end of the year?

In a transfer of receivables accounted for as a secured borrowing: a gain or loss is recorded. receivables are reduced. a finance charge is recorded. a recourse liability is recognized.

a finance charge is recorded.

A company with a _________________ is better able to survive bad times, to recover from unexpected setbacks, and to take advantage of profitable and unexpected investment opportunities. a low degree of liquidity a low degree of solvency low degree of financial flexibility a high degree of financial flexibility

a high degree of financial flexibility

Transport Corporation reports the following information for the current period: Sale of office building $1,300,000Purchase of building 650,000On May 1, borrowed at 5% interest 700,000Sale of equipment 800,000 Transport should report net cash provided by investing activities of a. $1,450,000. b. $1,150,000. c. $150,000. d. $2,150,000.

a. $1,450,000. $1,300,000 - $650,000 + $800,000 = $1,450,000.

On December 31, 2025, Flint Corporation sold land having an original cost of $120,000. The terms of the sale were as follows: $30000 down payment $60000 payable on December 31, 2026 and December 31, 2027 The agreement of sale made no mention of interest; however, 9% would be a fair rate for this type of transaction. What should be the amount of the notes receivable net of the unamortized discount on December 31, 2025 rounded to the nearest dollar? the present value of an ordinary annuity of 1 at 9% for 1 year is 0.91743 the present value of an ordinary annuity of 1 at 9% for 2 years is 1.75911 the present value of a single-sum of 1 at 9% for 1 year is 0.91743 the present value of a single-sum of 1 at 9% for 2 years is 0.84168 a. $105,547 b. $135,546. c. $120,000. d. $211,092.

a. $105,547 the zero-interest bearing note has installment payments of $56,400, and is therefore an annuity. > PVOA = PMT × PVOAF(n=2,i=9%) > PVOA = $60,000 × 1.75911 = $105,547 On Dec. 31, 2021, the full JE would be: DR. Cash.............. ......... 30,000 DR. Note Receivable..... 120,000 CR. Discount on N.R....... 14,453 CR. Land......................... 120,000 CR. Gain on disposal...... 15,547

Artemis Inc.'s trial balance before year-end adjustments included the following $ balances: Sales revenue.................................1,700,000 credit Sales returns and allowance........... 56,000 debit Accounts receivable........................ 172,000 debit Allowance for doubtful accounts...... 3,040 credit If the estimate of uncollectible accounts is 10% of gross accounts receivables, the amount of Bad Debt Expense adjustment needed at year-end is a. $14,160. b. $17,200. c. $16,896. d. $20,240.

a. $14,160.

Artemis Inc.'s trial balance before year-end adjustments included the following $ balances: Sales revenue.................................1,700,000 creditSales returns and allowance........... 56,000 debitAccounts receivable........................ 172,000 debitAllowance for doubtful accounts...... 3,040 credit If the estimate of uncollectible accounts is 10% of gross accounts receivables, the amount of Bad Debt Expense adjustment needed at year-end is a. $14,160. b. $17,200. c. $16,896. d. $20,240.

a. $14,160.

The beginning balance of Accounts Receivable for George Company was $25,000. Net sales (all on account) for the year amounted to $200,000. The Company does not offer any cash discount. During the year $180,000 was collected on accounts receivable. The accounts receivable turnover is a. 5.7 times. b. 5.1 times. c. 4.4 times. d. 8.0 times.

a. 5.7 times. $200,000 ÷ [($25,000 + $45,000) ÷ 2] = 5.7.

AG Inc. made a $25,000 sale on account with the following terms: 2/10, n/30. If the company uses the net method to record sales made on credit, what is/are the debit(s) in the journal entry to record the sale? a. Debit Accounts Receivable for $24,500 b. Debit Accounts Receivable for $24,500 and Sales Discounts for $500 c. Debit Accounts Receivable for $25,000 d. Debit Accounts Receivable for $25,000 and Sales Discounts for $500

a. Debit Accounts Receivable for $24,500 $25,000 × (1 - .02) = $24,500

In preparing a statement of cash flows, which of the following transactions would be considered an investing activity? a. Sale of damaged manufacturing equipment b. Sale of $2m in merchandise on credit c. Declaration of a cash dividend d. Issuance of bonds payable at a discount

a. Sale of damaged manufacturing equipment

When the stated rate does not equal the market rate at the date of issuance, the entry to record the issuance of the note will include a. either a credit to Discount on Notes Receivable or a debit to Premium on Notes Receivable. b. credits to Notes Receivable and Interest Receivable. c. either a debit to Discount on Notes Receivable or a credit to Premium on Notes Receivable. d. a debit to cash and a credit to Notes Receivable for the face amount of the note.

a. either a credit to Discount on Notes Receivable or a debit to Premium on Notes Receivable.

A note receivable is supported by a formal promissory note. is a negotiable instrument. always contains an interest element. all of these answer choices are correct.

all of these answer choices are correct.

Notes receivable can be classified as current. trade. nontrade. all of these answer choices are correct.

all of these answer choices are correct.

Receivables may be classified as all of following except: current or noncurrent. accounts receivable or notes receivable. all the answer options list possible classifications. trade receivables or nontrade receivables.

all the answer options list possible classifications.

Olmsted Company has the following items: Preferred Stock, $50,000, common stock, $900,000; treasury stock, $105,000; Employee Benefit Obligations, $125,000 and retained earnings, $454,000. What total amount should Olmsted Company report as stockholders' equity? a. $1,174,000. b. $1,299,000. c. $1,424,000. d. $1,549,000.

b. $1,299,000. $950,000 - $105,000 + $454,000 = $1,299,000.

Before year-end adjusting entries, Dunn Company's account balances at December 31, 2025, for accounts receivable and the related allowance for uncollectible accounts were $1,500,000 and $90,000, respectively. An aging of accounts receivable indicated that $125,000 of the December 31 receivables are expected to be uncollectible. At December 31, 2025, the net realizable value (NRV) of accounts receivable is a. $1,465,000. b. $1,375,000. c. $1,285,000. d. $1,410,000.

b. $1,375,000. $1,500,000 - $125,000 = $1,375,000

David Company uses the gross method to record sales made on credit. On June 10, 2025, it sold goods worth $250,000 with terms 2/10, n/30 to Charleston Inc. On June 19, 2025, David received payment for 1/2 of the amount due from Charleston. David's fiscal year end is June 30, 2025. What amount will be reported in the financial statements for the accounts receivable due from Charleston? a. $122,500. b. $125,000. c. $250,000. d. $245,000.

b. $125,000. $250,000 - ($250,000/2) = $125,000

Lohmeyer Corporation reports: Cash provided by operating activities $320,000 Cash used by investing activities 110,000 Cash provided by financing activities 140,000 Beginning cash balance 90,000 What is Lohmeyer's ending cash balance? a. $410,000 b. $440,000 c. $570,000 d. $660,000

b. $440,000 $90,000 + $320,000 - $110,000 + $140,000 = $440,000.

Black Cat Company began the year with a credit balance in the Refund Liability account of $48,000. Credit sales during the year were $725,000. Black Cat customers made cash payments on account of $694,000. During the year, customers returned $36,000 worth of goods. Black Cat estimates that 6% of credit sales will be returned. What is the balance in Black Cat's Refund Liability account at the end of the year? a. $127,500 b. $55,500 c. $43,500 d. $53,640

b. $55,500 $48,000 + ($725,000 x 6%) - $36,000 = $55,500

Microgreens, Inc. reports the following information for the current period: Purchase of land $ 750,000 Sale of farm land 820,000 Sale of farm house, buildings 990,000 Construction of greenhouse facilities 1,925,000 Sale of farming equipment 288,000 Microgreens should report net cash provided by (used by) investing activities of a. $3,735,000. b. ($ 577,000). c. ($1,105,000). d. $1,155,500.

b. ($ 577,000). $820,000 + $990,000 + $288,000 - $750,000 - $1,925,000 = $(577,000)

Equestrian Roads sold $120,000 of goods and accepted the customer's $120,000 10%, 1-year notes receivable in exchange. Assuming 10% approximates the market rate of return, what would be the debit in this journal entry to record the sale? the present value of an ordinary annuity of 1 at 10% for 1 year is 0.90909 the present value of an ordinary annuity of 1 at 10% for 2 years is 1.73554 the present value of a single-sum of 1 at 10% for 1 year is 0.90909 the present value of a single-sum of 1 at 10% for 2 years is 0.82645 a. No journal entry until cash is collected b. Debit Notes Receivable for $120,000 c. Debit Accounts Receivable for $120,000 d. Debit Notes Receivable for $108,000

b. Debit Notes Receivable for $120,000 PV principal = 120,000 × .90909 = 109,091 PVOA interest = 12,000 × .90909 = 10,909 total: 120,000

Which of the following would not be classified as a long-term investment on the balance sheet? a. Cash surrender value of life insurance b. Franchise c. Land held for speculation d. A sinking fund

b. Franchise

Sun Inc. factors $6,000,000 of its accounts receivables with recourse for a finance charge of 3%. The finance company retains an amount equal to 10% of the accounts receivable for possible adjustments. Sun estimates the fair value of the recourse liability at $300,000. What would be recorded as a gain or loss on the transfer of receivables? a. Gain of $180,000 b. Loss of $480,000 c. Gain of $1,080,000 d. Loss of $300,000

b. Loss of $480,000 ($6,000,000 × .03) + $300,000 = $480,000

Which of the following would be classified in a different major section of a balance sheet from the others? a. Capital stock b. Stock investments c. Additional paid-in capital d. Accumulated other comprehensive income

b. Stock investments

In preparing a statement of cash flows, the sale of treasury stock at an amount greater than cost would be classified as a(n) a. operating activity. b. financing activity. c. noncash investing and financing activity. d. investing activity.

b. financing activity.

Geary Co. assigned $1,600,000 of accounts receivable to Kwik Finance Co. as security for a loan of $1,340,000. Kwik charged a 2% commission on the amount of the loan; the interest rate on the note was 10%. During the first month, Geary collected $440,000 on assigned accounts after deducting $1,520 of discounts. Geary accepted returns worth $5,400 and wrote off assigned accounts totaling $11,920. The amount of cash Geary received at the time of the assignment was a. $1,206,000. b. $1,308,000. c. $1,313,200. d. $1,340,000.

c. $1,313,200 DR. Cash....................................................1,313,200 DR. Interest Expense [2% × $1,340,000]... 26,800 CR. Notes Payable.................................... 1,340,000

Geary Co. assigned $1,600,000 of accounts receivable to Kwik Finance Co. as security for a loan of $1,340,000. Kwik charged a 2% commission on the amount of the loan; the interest rate on the note was 10%. During the first month, Geary collected $440,000 on assigned accounts after deducting $1,520 of discounts. Geary accepted returns worth $5,400 and wrote off assigned accounts totaling $11,920. The amount of cash Geary received at the time of the assignment was a. $1,206,000. b. $1,308,000. c. $1,313,200. d. $1,340,000.

c. $1,313,200. DR. Cash....................................................1,313,200 DR. Interest Expense [2% × $1,340,000]... 26,800 CR. Notes Payable.................................... 1,340,000

Fulton Company owns the following investments: Trading securities (fair value) $160,000 Available-for-sale securities (fair value) 70,000 Held-to-maturity securities (amortized cost) 94,000 Fulton will report investments in its current assets section of a. $0. b. $160,000. c. $160,000. or an amount greater than $160,000, depending on the circumstances. d. $230,000.

c. $160,000. or an amount greater than $160,000, depending on the circumstances. At a minimum, ST Investments will include trading securities; they cannot be classified as LT. AFS and HTM securities could be classified as either LT or ST depending on the maturity dates and management intent.

Fulton Company owns the following investments: Trading securities (fair value) $160,000Available-for-sale securities (fair value) 70,000Held-to-maturity securities (amortized cost) 94,000 Fulton will report investments in its current assets section of a. $0. b. $160,000. c. $160,000. or an amount greater than $160,000, depending on the circumstances. d. $230,000.

c. $160,000. or an amount greater than $160,000, depending on the circumstances. At a minimum, ST Investments will include trading securities; they cannot be classified as LT. AFS and HTM securities could be classified as either LT or ST depending on the maturity dates and management intent.

The following $ information is available for Murphy Company: Allowance for doubtful accounts at January 1, 2025..... 24,000Credit sales during 2025.................................................1,200,000Accounts receivable written off during 2025.................... 27,000 As a result of a review and aging of accounts receivable, it is determined that a $16,000 balance in the allowance for bad debts is needed at December 31, 2025. What amount should Murphy record as bad debt expense for the year ended December 31, 2025? a. $13,000 b. $16,000 c. $19,000 d. $40,000

c. $19,000

Wilkinson Corporation factored, with recourse, $500,000 of accounts receivable with Huskie Financing. The finance charge is 3%, and 5% was retained to cover sales discounts, sales returns, and sales allowances. Wilkinson estimates the recourse obligation at $12,000. What amount should Wilkinson report as a loss on the sale of receivables? a. $0 b. $15,000 c. $27,000 d. $52,000

c. $27,000 ($500,000 × .03) + $12,000 = $27,000

Jenny Manufacturing Company sold toys listed at $360 per unit to Jackson, Inc. for $306, which included a trade discount of 15 percent. Jackson, in turn, sells the toys at a holiday market for $335 each. Jenny should record the receivable and related sales revenue (per unit) at a. $360. b. $335. c. $306. d. $285.

c. $306. trade discount = reduce the listed price for a customer.

Sauder Corporation reports the following information for the current period: Net income $380,000 Depreciation expense 70,000 Increase in accounts receivable 30,000 Sauder should report cash provided by operating activities of a. $280,000. b. $340,000. c. $420,000. d. $480,000.

c. $420,000. $380,000 + $70,000 - $30,000 = $420,000.

Sauder Corporation reports the following information for the current period: Net income $380,000Depreciation expense 70,000Increase in accounts receivable 30,000 Sauder should report cash provided by operating activities of a. $280,000. b. $340,000. c. $420,000. d. $480,000.

c. $420,000. $380,000 + $70,000 - $30,000 = $420,000.

Harding Corporation reports the following information for the current period: Net income $530,000Depreciation expense 140,000Increase in inventory 60,000 Harding should report cash provided by operating activities of a. $330,000. b. $450,000. c. $610,000. d. $730,000.

c. $610,000. $530,000 + $140,000 - $60,000 = $610,000.

The balance sheet contributes to financial reporting by providing a basis for all of the following except a. computing rates of return. b. evaluating the capital structure of the enterprise. c. determining the increase in cash due to operations. d. assessing the liquidity and financial flexibility of the enterprise.

c. determining the increase in cash due to operations.

Companies that have strong financial flexibility a. are careful in their spending on capital projects when inflation rates are below 5%. b. tend to sell their Treasury Stock to get cash to develop new products. c. have a greater chance of surviving during long recessions. d. only engage in multiple projects if are able to issue bonds at a premium.

c. have a greater chance of surviving during long recessions.

The amount of time that is expected to elapse until an asset is realized or otherwise converted into cash is referred to as a. solvency. b. financial flexibility. c. liquidity. d. exchangeability.

c. liquidity.

Wilton Corp. has outstanding accounts receivable totaling $6.5 million as of December 31 and sales on credit during the year of $24 million. There is also a credit balance of $12,000 in the allowance for doubtful accounts. If the company estimates that 6% of its outstanding receivables will be uncollectible, what amount of bad debt expense will be reported on Wilton's income statement? a. $ 402,000. b. $ 390,000. c. $1,440,000. d. $ 378,000.

d. $ 378,000. ($6,500,000 × .06) - $12,000 = $378,000

Waterfront, Inc. reports the following information for the current period: Paid annual cash dividend $550,000 On July 1, borrowed at 8% interest 1,700,000 Purchase of beachfront land, buildings 1,400,000 Paid off loan on sold equipment 130,000 Waterfront should report net cash provided by (used by) financing activities of a. $1,088,000. b. ($2,420,000). c. ($ 952,000). d. $1,020,000.

d. $1,020,000. $1,700,000 - $1,400,000 - $550,000 - $130,000 = $1,020,000.

Kohler Company owns the following investments: Trading securities (fair value) $120,000 Available-for-sale securities (fair value) 90,000 Held-to-maturity securities (amortized cost) 94,000 Kohler will report securities in its long-term investments section of a. $210,000. b. $214,000. c. $294,000. d. $184,000 or an amount less than $184,000, depending on the circumstances.

d. $184,000 or an amount less than $184,000, depending on the circumstances. At most, LT Investments will include AFS and HTM, depending on the maturity dates and management intent. LT Investments do not include trading securities.

Sheephead Company sells land with a book value of $175,000 to Drum Corp. in exchange for a $280,000 zero-interest-bearing note payable in 3 years. The market rate of interest for a transaction of this nature for Drum is 8%. If the sale occurred on January 1 and the fiscal year ends on December 31, the adjusting journal entry for interest revenue at the end of the second year using the effective-interest method (rounded to the nearest dollar) is the present value of an ordinary annuity of 1 at 8% for 1 year is 0.92593 the present value of an ordinary annuity of 1 at 8% for 3 years is 2.5771 the present value of a single-sum of 1 at 8% for 1 year is 0.92523 the present value of a single-sum of 1 at 8% for 3 years is 0.79383 a. $17,781. b. $19,245. c. $18,000. d. $19,204.

d. $19,204.

Vasquez Corporation had a Jan.1, 2025 balance in the Allowance for Doubtful Accounts of $40,000. During 2025, it wrote off $28,800 of accounts and collected $8,400 on accounts previously written off. The balance in Accounts Receivable was $800,000 at Jan. 1, 2025 and $960,000 at Dec. 31, 2025. At Dec. 31, 2025, Vasquez estimates that 5% of accounts receivable will prove to be uncollectible. What should McGlone report as its Allowance for Doubtful Accounts at 12/31/25? a. $8,000. b. $28,400. c. $36,800. d. $48,000.

d. $48,000.

Humming Corporation reported net credit sales of $3,260,000 for this year. The company had accounts receivable of $375,000 at the beginning of the year. During the year, the only transactions to affect receivables were the credit sales and collections of $3,170,000. What was Humming's average days to collect? a. 36.5 days b. 42.0 days c. 8.7 days d. 47.0 days

d. 47.0 days $3,260,000 / {[$375,000 + ($375,000 + $3,260,000 - $3,170,000)]/2} = 7.76 ; $3,260,000/$420,000 = 7.76 Times ; 365/7.76 Times = 47.0 Days

Which of the following should be reported for capital stock? a. The shares authorized b. The shares issued c. The shares outstanding d. All of these answer choices are correct.

d. All of these answer choices are correct.

When using the allowance method, which of the following should be recorded first when a company collects an accounts receivable that was previously written off? a. Debit Allowance for Doubtful Accounts, credit Accounts Receivable b. Debit Allowance for Doubtful Accounts, credit Bad Debt Expense c. Debit Bad Debt Expense, credit Allowance for Doubtful Accounts d. Debit Accounts Receivable, credit Allowance for Doubtful Accounts

d. Debit Accounts Receivable, credit Allowance for Doubtful Accounts

The amount of consideration that a company expects to receive from a customer in exchange for transferring goods or services is a. the transaction price. b. an amount specified and determined in the contract. c. easily determined because it is a fixed amount. d. all of these answers are correct.

d. all of these answers are correct.

When a customer purchases inventory from a business organization, the customer may be given a discount which is designed to induce prompt payment. Such a discount is called a(n) a. trade discount. b. nominal discount. c. enhancement discount. d. cash (sales) discount.

d. cash (sales) discount.

The current assets section of the balance sheet should include a. machinery. b. patents. c. goodwill. d. inventory.

d. inventory.

The accounts receivable turnover is computed by dividing a. gross sales by ending net receivables. b. gross sales by average net receivables. c. net sales by ending net receivables. d. net sales by average net receivables.

d. net sales by average net receivables.

Treasury stock should be reported as a(n) a. current asset. b. investment. c. contra asset. d. reduction of stockholders' equity.

d. reduction of stockholders' equity.

Finance companies that buy receivables from businesses are called: recoursers. principles. receivers. factors.

factors.

Activities that involve the cash effects of making and collecting loans and acquiring and disposing of property, plant, and equipment are classified as: noncash activities. financing activities. operating activities. investing activities.

investing activities.

The direct write-off method is based on facts, not estimates. is often used for financial reporting purposes. records the expense in the same period as the associated revenue. all of these answer choices are correct.

is based on facts, not estimates.

The accounts receivable turnover ratio is computed by dividing net sales by average net receivables. net sales by ending net receivables. gross sales by ending net receivables. gross sales by average net receivables.

net sales by average net receivables.

Major limitations of the balance sheet include all of the following except: judgments and estimates are used to determine many of the items reported. it necessarily omits many items that are of financial value but cannot be recorded objectively. most assets and liabilities are reported at historical cost. only amounts known with absolute certainty are reported.

only amounts known with absolute certainty are reported.