Question
1. What is the maturity value of a note? A. The principal amount minus interest due B. The principal amount plus interest due C. The
1. What is the maturity value of a note? A. The principal amount minus interest due B. The principal amount plus interest due C. The face amount of the note D. The principal amount times the interest rate
2.
A creditor is a person or business who:
A. | has a payable to another party. | |
B. | purchases goods on account | |
C. | invests money in the stock of a company. | |
D. | has a receivable from another party. |
3.
A company has significant uncollectible receivables. Why is the direct write-off method unacceptable?
A. | Assets will be understated on the balance sheet. | |
B. | It violates the matching principle. | |
C. | Direct write-offs would be immaterial. | |
D. | It is not allowed for tax reasons. |
4.
The following information is needed to reconcile the cash balance for Woods Paper Products. A deposit of $5,794.62 is in transit . Outstanding checks total $1,533.25. The book balance is $5,695.62 . The bookkeeper recorded a $1,524.00 check as $15,240 in payment of the current month's rent . The bank balance at February 28, 2008 was $16,500.25 . A deposit of $300 was credited by the bank for $3,000. A customer's check for $1,280 was returned for nonsufficient funds . The bank service charge is $70. Which of the following journal entries is needed to adjust for the NSF check?
A. | Accounts receivable 1,280 Cash 1,280 | |
B. | Cash 1,280 Sales revenue 1,280 | |
C. | NSF check 1,280 Cash 1,280 | |
D. | Accounts payable 1,280 Cash 1,280 |
5.
Zorro Company has significant amounts of accounts receivable, and experiences uncollectible accounts from time to time. Zorro uses the direct write-off method. When Zorro Company writes off an uncollectible receivable, what is the effect of that single transaction?
A. | It will reduce net income. | |
B. | It will have no effect on net income. | |
C. | It will increase total assets of the company. | |
D. | It will generate positive cash flow. |
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