Which of the following statements is incorrect regarding the classification of accounts and notes receivable? a. Valuation accounts should be appropriately offset against the proper receivable accounts. b. Segregation of the different types of receivables is required if they are material. c. Disclose any loss contingencies that exist on the receivables. d. Any discount or premium resulting from the determination of present value in notes receivable transactions is an asset or liability respectively.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
1. Which of the following statements is incorrect regarding the classification of accounts and notes receivable?
a. Valuation accounts should be appropriately offset against the proper receivable accounts.
b. Segregation of the different types of receivables is required if they are material.
c. Disclose any loss contingencies that exist on the receivables.
d. Any discount or premium resulting from the determination of present value in notes receivable transactions is an asset or liability respectively.
2. Which of the following is an appropriate reconciling item to the balance per bank in a bank reconciliation?
a. Bank service charge
b. Chargeback for NSF check
c. Deposit in transit
d. Bank interest
3. Which of the following is not true?
a. The Petty Cash account is debited when the fund is replenished.
b. The imprest petty cash system in effect adheres to the rule of disbursement by check.
c. Entries are made to the Petty Cash account only to increase or decrease the size of the fund or to adjust the balance if not replenished at year-end.
d. All of these answer choices are not true.
4. Statement 1: Companies must allocate the cost of all the goods available for sale (or use) between the income statement and the
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect.
5. Woods Co. received merchandise on consignment. As of January 31, Jordan included the goods in inventory, but did not record the transaction. The effect of this on its financial statements for January 31 would be
a. net income, current assets, and
b. net income, current assets, and retained earnings were overstated.
c. net income was correct and current assets were understated.
d. net income and current assets were overstated and current liabilities were understated.
Step by step
Solved in 2 steps
