Answer Happy

1 Skipped The primary difference between trade receivables and notes receivable is that Multiple Choice O a note receivable is a promise in writing, whereas a trade receivable is created when there is a credit sale on an open account. trade receivables are classified as current; notes receivable are classified as long-term. trade receivables are classified as trade receivables, whereas notes receivable are classified as non-trade. trade receivables are normal business activity with customers, whereas notes receivable are from activity with suppliers.

2 When a bank reconciliation is being prepared, deposits in transit should be Multiple Choice O O deducted from the cash balance per books. added to the cash balance per books. added to the cash balance per bank statement. deducted from the cash balance per bank statement.

3 Title to the goods must pass from the seller to the buyer before the seller is allowed to recognize revenue. True or False True False

4 Which of the following is considered a cash equivalent? Multiple Choice O Cash deposited with banks. An investment in common shares in a publicly traded company. Cash on hand. Short-term, highly liquid investments purchased within three months of maturity

5 When a bank reconciliation is being prepared, proceeds of customer notes collected by the bank should be Multiple Choice O O deducted from the cash balance per bank statement. added to the cash balance per bank statement. added to the cash balance per books. deducted from the cash balance per books.

6 Assume that the days to collect ratio was 60 days during 2020, 34 days in 2019, and 33 days in 2018. What is a possible explanation for the increase in the days to collect during 2020? Multiple Choice O O There is no explanation, as that combination of changes is not possible. The company may have sold its receivables to another company for them to collect (referred to as factoring) The company may have tightened its credit-granting policies during 2018, The company may be channel stuffing. Prev 6 of 10 Next >

7 Which of the following statements regarding the receivable turnover is not correct? Multiple Choice O Collections from customers cause the balance in accounts receivable account to decrease O O When a company sells on credit, the balance in its accounts receivable account increases. The receivables turnover ratio is also referred to as the days to collect ratio. A sudden decline in the receivables turnover ratio may indicate that the company is channel stuffing.

Sales returns and allowances should be recorded in a contra-revenue account, which normally has a credit balance. True or False True False