Which of the following is true about cash reporting under IFRS?
Overdrafts in one cash account can typically be offset against positive balance in other cash accounts.
Which of the following is NOT true about accounting for merchandise returns?
The refund liability is credited when a customer makes a return
Lewis Diagnostics sold merchandise to a customer in exchange for a $40,000, four-year, noninterest-bearing note when an equivalent loan would carry 8% interest. Lewis would record sales revenue on the date of sale equal to:
The present value of $40,000 using an 8% interest rate.
Which of the following is true regarding accounting for transfers of receivables under IFRS?
Whether the risks and rewards of ownership have been transferred is sometimes the key factor for determining how to account for a transfer of receivables.
At the end of June, the Marquess Company factored $200,000 in accounts receivable with Homemark Finance. The transfer is made without recourse. Homemark charges a fee of 3% of receivables factored. During July, $150,000 of the factored receivables are col
6,000
Allister Company does not use the allowance method to account for bad debts and instead any bad debts that do arise are written off as bad debt expense. What problem might this create if bad debts are material?
Receivables likely will be overstated
Harmon Sporting Goods received a $60,000, 6-month, 10% note from a customer. Four months after receiving the note, it was discounted at a local bank at a 12% discount rate. The cash proceeds received by Harmon were:
61,740
An internal control system is designed to do all but which of the following?
Assure the promotion of the most qualified employees.
At the end of June, the Marquess Company factored $200,000 in accounts receivable with Homemark Finance. Homemark charges a fee of 3% of receivables factored. During July, $150,000 of the factored receivables are collected. If the transfer were made with
8,000
A company uses the gross method to account for cash discounts offered to its customers. If payment is made before the discount period expires, which of the following is correct?
Sales discounts is debited for the amount of discounts taken by customers.
Enchill Company accrues bad debt expense during the year at an amount equal to 3% of credit sales. At the end of the year, a journal entry adjusts the allowance for uncollectible accounts to a desired amount based on an aging of accounts receivable. At th
17,000
Which of the following might be classified as a cash equivalent?
30-day treasury bill
The Reingold Hat Company uses the allowance method to account for bad debts. During 2018, the company recorded $800,000 in credit sales. At the end of 2018, account balances were: Accounts receivable, $120,000; Allowance for uncollectible accounts, $3,000
24,000
Jasper Company uses the allowance method to account for bad debts. During 2018, the company recorded bad debt expense of $9,000 and wrote off as uncollectible accounts receivable totaling $5,000. These transactions caused a decrease in working capital (cu
9,000
Which of the following is NOT true about accounting for a troubled debt restructuring?
If a receivable is continued, but with modified terms, no loss is typically recorded.