Cash Consists of all the following except:

• Money orders
• Short term paper with a maturity of 6 months
• Personal Cecks
• Certified checks

Which of the following classifications is likely to be eliminated by the FASB?

• Cash equivalents
• Short-term investments
• Restricted Cash
• Temprary Investments 

• Cash Equivalenets 

Can cash be classified as a current or long-term asset?

• True
• False

• True, companies classify restricted cash either in the current assets or in teh long-term assets section, depending on the date of avaliablilty or disbursment. Cash classified in the long term-section is frequently set aside for plant expansion or retirement of long-term debt. 

Short-term paper with maturites of less than 3 months should be classified as what?

• investments
• recievables
• cash equivalents
• temporary investments 

• Cash equivalents

Non-trade recievables include the following except:

• deposits paid to cover poentail losses
• Oral promises of the purcaser to pay for goods and services sold.
• Claims against defedands under suit.
• Dividents recievable.

• Oral promieses of the purchaser to pay for goods and services sold. Oral promises of the purchaser to pay for goods and services is a trade recievable.

If a company purchses merchandise on terms of 1/10, n/30, the cash discount availiable is equivalent to what effective annual rate of interest(360 day year).

• 12%
• 18%
• 30%
• 1%

• 18% [360 / ( 30 days - 10 days)] x 1% = 18% effective annual rate of interest

Which of the following methods of determing annual bad debt expense violates the expense recognition concept?

• percentage of average accounts receivable
• direct write-off
• percentage of sales
• percentage of ending accoutns receivable

• Direct write-off, it fails to record expenses in the same period as the assocaited revenue. Therefor violates the expense recognition concept. 

Under the direct write-off method, bad debts are only recongnized when an account is determined to be uncollectible.

• True
• False

• True, under the direct write-off method, bad debts are only recognized when an account is determined to be uncollectible. 

• False, aging is an estimation method used with percentage-of-accounts recievable approach. 

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• 120,000
• 211,091
• 105,546
• 135,546

• The present value of the annuity is ($60,000 x 1.75911) or $105,546.

The interest rate that equates the cash paid with the amount recieved in the future on a zero-interst bearing note is the:

• effective rate
• imputed rate
• implicit rate
• stated rate

• implicit rate

If a company elects the fair value option, unrealized holding gains and losses on receivalbes are reported as part of other comprehinsive income?

• True
• False

• False, unrealized holding gains and losses on receivalbes are included in net income

In a transfer of receivables account for as secured borrwing:

• receivables are reduced
• a recourse liability is recognized
• a gain or loss is recorded
• a finance chage is recoreded

• a finance charge is recorded, in a transfer of receivalbes accounted for as borrowing, the receivables remain on the books of the borrower and a finance charge is recorded. 

Which of the following statments is incorrect?

• Securitization requires the purchaser to service the receivables.
• Securitization takes a pool of assets, such as credit card receivables, and sells shares in these pools of interst and principal payments.
• Securitization can be virtually done with every asset with a payment stream and a long-term payment history.
• Securitization involves relativly lower fees and high quality reciebables. 

• Securitization requires the purchaser to service the receivables, ussually the seller continues to service the receivables.

Which of the following method used to generate cash from accounts receivable?

• assignment: yes, factoring: no
• assignment: yes, factoring: yes
• assignment: no, factoring: yes
• Asignment: no, factoring: no

• assignment yes, factoring yes. Both methods are used to generate cash from accounts receivable.

The accounts receivable turnover ratio measures the:

• percentage of accounts receivable turned over to a collection agency during the period
• percentage of accouts receivable arising during certain seasons
• number of times the average balance of inventory is sold during the preiod 
• number of times the average balance of accounts receivable is collected during the period.

• The accounts receivable turnover ratio measures, number of times the average balance of accounts receivable is collected during the period.

Which of the following help to reduce the size of a company's float?

• bank reconcilation procedures
• lockbox accounts
• petty cash accounts
• imprest accounts

• Lockbox accounts, multiple collection centers genrally reuce the size of a company's float. The greatest advantage of a lockbox is that it accerlates the avaliability of collected cash

A creditory basesan impairment loan loss on the difference between the present value of the future cash flows (using the historical effective interst rate) and the fair value of the note.

• true
• false

• false, a creditor bases an impairment loan loss on the difference between the present value of the future cash flows (using the effective hisotrical interst rate) and the carring amount of the receivable.

Under IFS, bank over drafts are:

• netted against cash balances only if there is a second account at the same bank with a balance sufficeient to cover the overdaft
• reported as current liabilities
• netted against cash balances
• reported as an expense

• bank overdrafts are netted agains cash balances