Question
Drebin Security Systems sold merchandise to a customer in exchange for a $50,000, five-year, noninterest-bearing note when an equivalent loan would carry 10% interest. Drebin
Drebin Security Systems sold merchandise to a customer in exchange for a $50,000, five-year, noninterest-bearing note when an equivalent loan would carry 10% interest. Drebin would record sales revenue on the date of sale equal to:
Multiple Choice
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$50,000.
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The present value of $50,000 using a 10% interest rate.
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Zero.
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The future value of $50,000 using a 10% interest rate.
Long-term interest-bearing notes receivable issued at an unrealistically low interest rate will be:
Multiple Choice
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Accounted for on the installment basis.
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Recorded at an amount equal to the future cash flows.
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Discounted at an imputed interest rate.
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Recorded at the contract amount.
The allowance for uncollectible accounts is a:
Multiple Choice
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Quasi-liability account.
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Contra asset account.
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Deferred charge to expense.
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Deferred revenue account.
On November 10 of the current year, Cherokee Industries sold materials to a customer for $8,000 with credit terms 2/10, n/30. Cherokee uses the net method of accounting for sales discounts. What entry would Cherokee make on November 17, assuming the correct payment was received on that date?
Multiple Choice
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Cash 7,840 Sales 160 Accounts receivable 8,000 -
Cash 7,840 Accounts receivable 7,840 -
Cash 8,000 Sales discounts 160 Accounts receivable 8,000 Sales 160 -
Cash 7,840 Sales discounts 160 Accounts receivable 8,000
Which of the following is not true regarding accounting for transfers of receivables under IFRS?
Multiple Choice
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Transfer of substantially all the risk and rewards of ownership is an important consideration.
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Transfers of receivables sometimes are treated as a sale of receivables.
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Transfers of receivables can be treated as a sale if the transferee is a QSPE.
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Transfers of receivables sometimes are treated as a secured borrowing.
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