Following are a series of statements regarding topics discussed in this chapter.
Required:
Indicate whether each statement is true (T) or false (F).
(a) Cash equivalents are funds that companies have invested in short-term securities that mature six months or less from the date of purchase.
(b) Short-term investments and inventory are quick assets.
(c) The direct write-off method results in an appropriate matching of sales revenue with bad debts expense.
(d) The risk of third-party (national) credit cards is greater than the risk of in-house credit.
(e) Sales Discounts is a contra-revenue account.
(f) Bank errors require an adjustment to the company’s general ledger cash account.
(g) Collecting a business’s accounts receivable may be more difficult than selling a business’s products.
(h) The credit terms for a sales transaction express the agreement between the buyer and seller regarding the timing of payment and any discount available to the buyer for early payment.
(i) On a bank reconciliation, outstanding checks decrease the bank account balance.
(j) Notes receivable are always dated in one-year increments.