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Accounting
Q:
abc company accepted a national credit card for a $4,000 purchase. the cost of the goods sold is $3,200. the credit card company charges a 3% fee. what is the impact of this transaction on net operating income? a.increase by $776 b.increase by $800 c.increase by $680 d.increase by $3,880
Q:
Two transactions were posted to the following customer account:NAME: Gen-X Products, Inc.Address: 123 My WayDateItemPost. Ref.DebitCreditBalanceMar. 1 Balance√ 1,150 10 Invoice No. 987R45990 2,140 19 Invoice No. 995CR78 8251,315Describe each transaction and the source of each posting.
Q:
factoring arrangements a.are ways to accelerate receivable collections b.involve no commissions or service charges because the factor is guaranteed collections on the due date c.are generally used by businesses that are insolvent d.are mainly used in the textile and furniture industries
Q:
Identify the three main advantages of a computerized accounting system over a manual accounting system.
Q:
selling accounts receivables to factors and allowing credit terms such as 2/10, n/30 a.represent common business practices b.represent ways to accelerate receivables collections c.result in collections that are less than the gross accounts receivable d.all of the above statements are correct
Q:
What is a business segment? How can business segments be analyzed?
Q:
simonic retailers accepted $75,000 of citibank visa credit card charges for merchandise sold on july 1. citibank charges 4% for its credit card use. the entry to record this transaction by simonic retailers will include a credit to sales of $75,000 and a debit(s) to: a.cash $72,000 and service charge expense $3,000 b.accounts receivable $72,000 and service charge expense $3,000 c.cash $72,000 and interest expense $3,000 d.accounts receivable $75,000
Q:
Maximilian Corporation provided revenue disclosures for the current year by its major product segments in the notes to its financial statements as follows:Major Product SegmentsCurrent Year(in millions)Petroleum-based products$10,450Industrial chemicals9,460Refined chemical products8,575Food additives7,325Emulsifiers6,900Pesticides5,870Salts4,545Wetting agents 3,215 Total revenues$56,340Prepare a vertical analysis. Round to one decimal place.
Q:
in the table below the information for four companies is provided.CompanyReceivables turnoverAverage collection periodMartin13.926.3Lewis13.327.4Danforth10.435.1Garner14.525.2Industry Average13.028.1assuming all four companies are in the same industry, which company appears to have the greatest likelihood of paying its current obligations?a.martinb.lewisc.danforthd.garner
Q:
Briefly describe the three-step process of accounting system development.
Q:
in the table below the information for four companies is provided.CompanyReceivables turnoverAverage collection periodMartin13.926.3Lewis13.327.4Danforth10.435.1Garner14.525.2Industry Average13.028.1if garner's net credit sales are $290,000, what are its average net receivables?a.$11,508b.$20,000c.$42,050d.$73,080
Q:
123 Kids TV operates in five major international segments. Segment Current Year(in millions)Prior Year(in millions) United States $ 9,132 $ 8,528 Canada 8,248 6,391 England 4,734 4,141 China 11,700 13,299 Brazil 5,645 6,391 Total revenues$39,459 $38,750Prepare a horizontal analysis of the segment data. Round percentages to two decimal places.
Q:
all of the following statements are true regarding the average collection period except: a.it is a popular variant of the receivables turnover ratio b.it is used to assess the effectiveness of a company's credit and collection policies c.it should generally exceed the credit term period d.its increase may suggest a decline in the financial health of customers
Q:
Define the meaning of the terms B2C and B2B as they relate to e-commerce.
Q:
windsor corporation sells its goods on terms of 2/10, n/30. it has a receivables turnover ratio of 7. what is its average collection period (days)? a.70 b.30 c.52 d.210
Q:
The Internet creates opportunities for improving the speed and efficiency of transactions. Name and describe three key areas besides e-commerce where the Internet is being used for business purposes.
Q:
leary corporation had net credit sales during the year of $960,000 and cost of goods sold of $600,000. the balance in receivables at the beginning of the year was $120,000 and at the end of the year was $180,000. what was the receivables turnover ratio? a.6.4 b.8.0 c.5.3 d.4.0
Q:
Payton Company has the following segment revenues for the two most recent years. SegmentCurrent Year(in millions)Prior Year(in millions)United States $ 825.00$ 600.00Canada325.50345.50Other countries 215.50 168.50 Total revenues$1,366.00$1,114.00Prepare a horizontal analysis of the segment data. Round to one decimal place.
Q:
the receivables turnover ratio a.is computed by dividing net credit sales for the accounting period by the cash realizable value of accounts receivable on the last day of the accounting period b.can be used to compute the average collection period c.is a method of evaluating the solvency of net accounts receivable d.is only important to internal users of accounting information
Q:
Two transactions were posted to the following supplier’s (creditor’s) account:NAME: Banner Computer Services, Inc.Address: 890 Novice LaneDateItemPost. Ref.DebitCreditBalanceJuly 1 Balance√ 5,64519 Invoice No. 45P16 1,7557,40026 Invoice No. 39CP363,500 3,900Describe each transaction and the source of each posting.
Q:
if a company uses the allowance method to account for uncollectible accounts, the entry to write off an uncollectible account only involves balance sheet accounts.
Q:
uncollectible accounts must be estimated because it is not possible to know which accounts will not be collected.
Q:
when using the allowance method bad debt expense is recorded when an individual customer defaults.
Q:
Eastwood Publishing reports the following segment data regarding its textbook sales:SegmentCurrent YearPrior YearCollege textbooks$ 78,000$ 55,000High school textbooks129,000115,000Elementary school textbooks 105,000 121,000Total revenues$312,000$291,000Perform a horizontal analysis and a vertical analysis for Eastwood Publishing. Round to one decimal place.
Q:
accounts receivable are the result of cash and credit sales.
Q:
The following purchase transactions occurred during August for Backcountry Kayak Excursions.Aug. 1 Purchased Kevlar kayaks (equipment) for $5,600 on account from Gear Inc.6 Purchased kayak paddles (supplies) for $3,250 on account from Southland Co.14 Purchased life vests (supplies) for $2,500 on account from Gear Inc.Journalize these transactions, using a purchases journal. Purchases Journal Page 1DateAccount CreditedPost.Ref.Accounts Payable Cr.Supplies Dr.Other AccountsDr.Post.Ref.Amount
Q:
accounts receivable are one of a companys least liquid assets.
Q:
The following purchases journal headings have been suggested for Tower Tree-Trimming Service Company. What problems do you see with these headings?DateAccount CreditedPost.Ref.AccountsPayable Dr.Accounts ReceivableCr.CashCr.Other AccountsDr.
Q:
. Payton Company has the following segment revenues for the two most recent fiscal years. SegmentCurrent Year(in millions)Prior Year(in millions)China $ 775.00$ 650.00Canada325.50245.50Other countries 215.50 168.50Total revenues$1,316.00$1,064.00Prepare a vertical analysis of the segment data. Round to one decimal place.
Q:
both accounts receivable and notes receivable represent claims that are expected to be collected in cash.
Q:
advances to employees are referred to as accounts receivable.
Q:
The following selected transactions were completed by Ridge Company during March of the current year:Mar. 5 Rendered services on account to Quinton Co., Invoice No. 92, $3,250. 10 Rendered services on account to Martin Inc., Invoice No. 93, $4,500. 13 Received $5,000 in payment of monthly rent, which was due on March 1. 15 Received payment from Quinton Co. for invoice of March 5. 19 Received payment from Martin Inc. for balance due on invoice of March 10. 20 Received amount due from Thomas Co. on sale made in February, $5,200. 31 Rendered services for cash during the month, $15,750.(a) Journalize the transactions, using a revenue journal and a cash receipts journal.(b) Total and rule the revenue and cash receipts journals.(c) Indicate the method of posting the individual items and the columnar totals of the revenue and cash receipts journals in the following manner: (1) For individual items and totals to be posted to the subsidiary ledger or not to be posted, insert a check mark in the Post. Ref. column or under the totals. (2) For individual items and totals to be posted to the general ledger, insert the letter "G" (as a substitute for specific account numbers) in the Post. Ref. column or under the totals. REVENUE JOURNAL Page 10 Post.Accts. Rec. Dr.DateInvoice No.Account DebitedRef.Fees Earned Cr. CASH RECEIPTS JOURNAL Page 23 OtherAccounts AccountPost.AccountsReceivableCashDateCreditedRef. Cr. Cr. Dr.
Q:
other receivables include non-trade receivables such as loans to company officers.
Q:
List the four most common special journals used in accounting and describe the transactions recorded in each journal.
Q:
trade receivables can be an account receivable or a note receivable.
Q:
The discovery and correction of errors is important in a computerized system. What kinds of errors might occur in these systems? What type(s) of errors will be prevented in a computerized system?
Q:
trade receivables occur when two companies trade or exchange notes receivables.
Q:
The following cash receipts journal headings have been suggested for Tower Tree-Trimming Service Company. What problems do you see with these headings? DateAccount CreditedPost.Ref.Fees EarnedCr.Accounts Receivable Cr.CashCr.Other Accounts Dr.
Q:
The following are selected transactions related to purchases on account and cash payments completed during April of the current year.Apr. 1 Issued Check No. 60 in payment of rent for month, $2,400. 5 Purchased office supplies from Clauson Co., $850. 9 Issued Check No. 61 to Dame Co. for $9,750 for cash purchase of equipment. 10 Purchased store supplies from Ewing Co., $425. 15 Issued Check No. 62 to Clauson Co. in payment of April 5 invoice. 17 Purchased store supplies from Patton Co., $7,500. 20 Issued Check No. 63 to Ewing Co. in payment of April 10 invoice of $425. 25 Purchased equipment from Sloan Co., $7,750. 27 Issued Check No. 64 to Patton Co. for partial payment of the April 17 invoice, $4,000. 30 Purchased office supplies from Winthrop Co., $400.(a) Journalize the transactions, using a purchases journal and a cash payments journal.(b) Total and rule the purchases and cash payments journals as of April 30.(c) Indicate the method of posting the individual items and the totals of the purchases and cash payments journals in the following manner: (1) For individual items and totals to be posted to the subsidiary ledger or not to be posted, insert a check mark in the Post. Ref. column or under the totals. (2) For individual items and totals to be posted to the general ledger, insert the letter "G" (as a substitute for specific account numbers) in the Post. Ref. column or under the totals. CASH PAYMENTS JOURNAL Page 11 OtherAccounts Ck.AccountPost.AccountsPayableCashDate No. DebitedRef. Dr. Dr. Cr. PURCHASES JOURNAL Page 22 AccountsStore AccountPost.PayableSupplies DateCreditedRef. Cr. Dr. OfficeOther Supplies AccountsPost. Dr. Dr.Ref. Amount
Q:
the allowance method of accounting for bad debts violates the matching principle.
Q:
an aging of accounts receivable schedule is based on the premise that the longer the period an account remains unpaid, the greater the probability that it will eventually be collected.
Q:
Describe and discuss e-commerce.
Q:
receivables are valued and reported in the balance sheet at their gross amount less any sales returns and allowances and less any cash discounts.
Q:
the two accounting problems with accounts receivable are: (1) recognizing and (2) disposing.
Q:
Explain whether each of the following would usually be used in a computerized accounting system and why or why not.1. Special journals2. Accounts receivable control accounts3. Electronic invoice form4. Month-end postings to the general ledger
Q:
the percentage of receivables basis of estimating uncollectible accounts ignores the existing balance in the allowance account when the bad debt adjusting entry is recorded.
Q:
The posting references in the following revenue journal are indicated by letters. Identify each posting reference [(a) through (h)] as representing (1) a posting to a general ledger account, (2) a posting to a subsidiary ledger account, or (3) that no posting is required. REVENUE JOURNAL Page 25 PostAcct. Rec. Dr.DateInvoice No.Account DebitedRef.Fees Earned Cr.Apr. 3190Hill Company(a)4,750 8191North Supply(b)5,025 13192Macon Inc.(c)2,100 17193White Products(d)6,000 25194Easton Supply(e)2,250 30195Karson Enterprises(f) 3,750 30 23,875 (g) (h)
Q:
the allowance for doubtful accounts is similar to accumulated depreciation in that it shows the total of all accounts written off over the years.
Q:
Voyager Electronic Services has three customers in its accounts receivable subsidiary ledger with beginning balances as follows:Fred Yao Ming, $1,150.00Kohl Townson, $850.00Chandra Jahi, $1,075.00Journalize the following transactions, using a general journal. Then post to the accounts receivable account in the general ledger and to the customer accounts in the accounts receivable subsidiary ledger. June 3 Kohl Townson paid $325.00 on account. 10 Chandra Jahi purchased $475.00 on account. 15 Fred Yao Ming paid $395.00 on account. 16 Fred Yao Ming purchased $685.00 on account. 23 Kohl Townson purchased $155.00 on account. General Journal Page 41DateDescriptionPost.Ref.DebitCredit Account Accounts Receivable Account No. 12DateItemPost. Ref.DebitCreditBalanceDebit CreditJune 1Beg. balance √ 3,075.00 ACCOUNTS RECEIVABLE SUBSIDARY LEDGERFred Yao MingDateItemPost. Ref.DebitCreditBalanceJune 1Beg. balance √ 1,150.00 Kohl TownsonDateItemPost. Ref.DebitCreditBalanceJune 1Beg. balance √ 850.00 Chandra JahiDateItemPost.Ref.DebitCreditBalanceJune 1Beg. balance √ 1,075.00
Q:
the allowance method of handling bad debts violates the matching principle.
Q:
Two transactions were posted to the following creditor’s account:NAME Windsurf, Inc.ADDRESS 343 Coastline RoadDateItemPost. Ref.DebitCreditBalanceAug. 1 Balance 1,210 8 Invoice No. 333CP381,210 — 15 Invoice No. 567P11 735735 Describe each transaction and the source of each posting.
Q:
For each of the following businesses, explain how a purchases journal might be modified for the specific business.1. North County Medical Center2. Tri-County Farms, Inc.3. Prescott’s Quick Lube and Tire Store
Q:
bad debt losses are a cost of selling on credit.
Q:
Explain what subsidiary ledgers are and give examples of three types of subsidiary ledgers that a business might use
Q:
if bad debt losses are significant, the direct write-off method is acceptable for financial reporting purposes.
Q:
cash realizable value is determined by subtracting allowance for doubtful accounts from net sales.
Q:
Connie and Jill operate Reardon's Bakery which has the following segment revenues for the most recent two fiscal years. Prepare a vertical analysis. Round percentages to two decimal places. Segment Current Year(in thousands) Prior Year(in thousands) Cakes $ 691,000$ 662,000 Cupcakes 512,000 550,000 Desserts 417,000 468,000 Beverages 875,000 815,000 Total revenues $2,495,000$2,495,000
Q:
the allowance for doubtful accounts is a liability account.
Q:
Define and describe an accounting system.
Q:
the direct write-off method of recognizing uncollectible account is not in accordance with good accounting practice.
Q:
Davidson, Inc., incurred the following transactions during the month of January. Record the appropriate ones in the cash receipts journal. If a transaction should not be recorded in the cash receipts journal, indicate in which journal it should be entered. (a) On January 3, Davidson, Inc., purchased a one-year insurance policy for $2,400. The account number for Prepaid Insurance is 16. (b) On January 5, Davidson, Inc., received a payment on account from Pasher Industries of $625. (c) On January 12, Davidson, Inc., made sales on account of $3,500 and sales for cash of $2,300. The account number for Fees Earned is 41. (d) On January 26, Davidson, Inc., received $1,250 in rent revenue from a tenant who leases a portion of its building. The account number for Rent Revenue is 44. (e) On January 29, Davidson, Inc., received a payment on account from Gooden, Inc. for $2,000. Cash Receipts Journal DateAccountCreditedPost.Ref.Other AccountsCr.Accounts Receivable Cr.CashDr.
Q:
under the allowance method, bad debt expense is debited when an account is deemed uncollectible and must be written off.
Q:
Mickey Co. does business in three regional segments: West, East, and Central. The following information is available:SegmentCurrent Year(in thousands)Prior Year(in thousands)East$ 776,000$ 664,000West824,000596,000Central 495,000 325,000Total revenues$2,095,000$1,585,000Prepare a horizontal analysis of the segment data. Round percentages to two decimal places.
Q:
when using the allowance method year-end adjustments for bad debt expense must be made.
Q:
Minnie Co. does business in three segments: Theme Parks, Movie Production, and Merchandise. The following information from the current year is available:SegmentCurrent Year(in thousands)Prior Year(in thousands)Theme Parks$ 776,000$ 664,000Movie Production824,000596,000Merchandise 495,000 325,000Total revenues$2,095,000$1,585,000Prepare a vertical analysis of the segment data. Round percentages to two decimal places.
Q:
when using the direct write-off method year-end adjustments for bad debt expense must be made.
Q:
Journalize the following five transactions of Porshe Creations, using a revenue journal:(a) On March 20, Porshe sold 25 cell phone covers to Xtreme at $4.50 per cover on Invoice No. 887.(b) On March 21, Porshe sold 5 cell phone covers to Sidekick for $7.50 per cover on Invoice No. 908.(c) On March 22, Porshe sold 18 cell phone covers to Rock-On at $4.25 per cover on Invoice No. 938.(d) On March 26, Porshe sold 200 cell phone covers to Micro at $3.75 each on Invoice No. 959.(e) On March 29, Porshe sold 6 cell phone covers to Charmers for $8.35 each on Invoice No. 997. Revenue Journal Page 15DateInvoiceNo.Account DebitedPost.Ref.Accts. Rec. Dr.Sales Rev. Cr.
Q:
under the allowance method, the cash realizable value of receivables is the same both before and after an account has been written off.
Q:
The posting references in the following purchases journal are indicated by letters. Identify each posting reference [(a) through (i)] as representing (1) a posting to a general ledger account, (2) a posting to a subsidiary ledger account, or (3) that no posting is required. PURCHASES JOURNAL Page 1DateAccountCreditedPost.Ref.AccountsPayableCr.OfficeSuppliesDr.StoreSuppliesDr. July 3 Morton Company(a)1,1501,150 7Jackson Co.(b)4,800 4,800 14Fallon Inc.(c)7,000 7,000 26Simpson Bros.(d) 2,350 31 15,30011,8001,150 (e)(f)(g) Account Other AccountsDr.PostRef.Amount Equipment (h)1,950 1,950 (i)
Q:
when an account receivable that was previously written off is collected, it is first necessary to reverse the entry to reinstate the customers account before recording the collection.
Q:
Match each of the following transactions to the journal or ledger (a through g) in which it would be entered.a. Purchases journalb. Revenue journalc. Cash receipts journald. Cash payments journale. Accounts receivable subsidiary ledgerf. Accounts payable subsidiary ledgerg. General journalCash payment posting to an individual vendor account
Q:
an aging schedule is prepared only for old accounts receivables that have been past due for more than one year.
Q:
in a promissory note, the party to whom payment is to be made is called the maker.
Q:
the two key parties to a note are the maker and the payee.
Q:
a note receivable is a written promise by the maker to the payee to pay a specified amount of money at a definite time.
Q:
there is only one way to calculate interest correctly.
Q:
when the due date of a note is stated in months, the time factor in computing interest is the number of months divided by 360 days.
Q:
in computing the maturity date of a note, the date the note is issued is included but the due date is omitted.
Q:
Match each of the following transactions to the journal (a through e) in which it would be entered.a. Cash receipts journalb. Cash payments journalc. Revenue journald. Purchases journale. General journalPurchased equipment on account
Q:
when a note is written to settle an open account no entry is necessary.