Working Capital and its Components

Question 1

Working capital is a measure of ______

Answer 1

solvency

Question 2

Cash surrender of life insurance is a current _____

Answer 2

asset

Question 3

Deferred revenues are current ______

Answer 3

liabilities

Question 4

Under GAAP, a short-term obligation may be excluded from current liabilities and included in noncurrent debt if the company ______ to ______ on a long-term basis and the intent is supported by the ability to do so and evidence supports it

Answer 4

intends; refinance

Question 5

Reclassification of short-term liability to long-term liability JE

Answer 5

DR: short-term liability
CR: long-term liability

Question 6

Under IFRS, short-term obligations expected to be refinanced on a long-term basis may ______ classified as noncurrent

Answer 6

not be

Question 7

Deposits held as compensating balances that are not legally restricted are included in:

Answer 7

cash and cash equivalents

Question 8

Deposits in transit are:

Answer 8

added to bank

Question 9

Outstanding checks are:

Answer 9

subtracted from bank

Question 10

service charges are:

Answer 10

subtracted from books

Question 11

Bank collections are:

Answer 11

added to books

Question 12

Errors are:

Answer 12

added/subtracted from either

Question 13

NSF are:

Answer 13

subtracted from books

Question 14

Interest income is:

Answer 14

added to books

Question 15

Accounts receivable are _____ promises to pay debts

Answer 15

oral

Question 16

Beg balance and credit sales are ______ to the A/R T account

Answer 16

debits

Question 17

Write-offs, note conversions, and cash collected are ____ to the A/R T account

Answer 17

credits

Question 18

____ _______ _____ of accounts receivable is the balance of the accts rec account adjusted fro allowances for receivables that may be uncollectible, sales discounts, and sales returns and allowances

Answer 18

net realizable value

Question 19

Discount method that records a sale without regard to the available discount

Answer 19

gross method

Question 20

Discount method that records sales and accounts receivable net of the available discount

Answer 20

net method

Question 21

Trade discounts are applied _______

Answer 21

sequentially

Question 22

Expected exchanges _______ affect sales, inventory, or COGS

Answer 22

do not

Question 23

If past experience shows that material percentage of receivables are returned, an __________ for sales returns should be established

Answer 23

allowance

Question 24

JE to record a sales return

Answer 24

DR: Sales returns & allowances
CR: Accts rec

Question 25

The _______ method of recognizing uncollectible accounts receivable is GAAP

Answer 25

allowance

Question 26

Allowance for uncollectible accounts is a _______ asset

Answer 26

contra

Question 27

% of ______, % of ___ ____, and aging ____ _____ are the three methods of the allowance method

Answer 27

sales; accts rec; accts rec

Question 28

% of sales emphasizes _______

Answer 28

matching

Question 29

Gross A/R - required ending allowance =

Answer 29

NRV

Question 30

Write offs are a ______ to the allowance T chart

Answer 30

debit

Question 31

Beg. balance, recoveries, and the current year bad debt expense are ______ to the allowance T chart

Answer 31

credits

Question 32

Under the aging of receivables method, the sum of the product for each aging category will be the desired _______ ______ in the allowance account

Answer 32

ending balance

Question 33

When a receivable is deemed uncollectible, this JE is made:

Answer 33

DR: allowance for doubtful accounts CR: accts rec

Question 34

JE to restore an account previously written off

Answer 34

DR: accts rec CR: allowance for uncollectible accts

Question 35

JE to record increase in allowance account

Answer 35

DR: bad debt expense CR: allowance for uncollectible accts

Question 36

Pledging uses exists accts rec as _________

Answer 36

collateral

Question 37

Pledging requires only _____ _____

Answer 37

note disclosure

Question 38

Pledging JE:

Answer 38

DR: cash CR: note payable

Question 39

Factoring accts rec without recourse is a true:

Answer 39

sale

Question 40

Factoring of accts rec with recourse can be either a:

Answer 40

sale or loan

Question 41

Notes receivable are ______ promises to pay a debt

Answer 41

written

Question 42

Notes receivable are stated at ______ ______

Answer 42

present value

Question 43

Discounting of notes receivable is the same as the ______ of accts rec

Answer 43

factoring