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Cash equivalents would include investments in marketable equity securities as long as manageme
nt intedsto sell the securities in the next three months.

11.Using the balance sheet approach, bad debt expense is an indirect result of estimating the net r
ealizable value of accounts receivable.

28.Important elements of an internal control system for cash disbursements include each of the following

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 cash discounts

Harvey's Wholesale Company sold supplies of $46,000 to Northeast Company on April 12 of the current
year, with terms 1/15, n/60. Harvey uses the net method of accounting for cash discounts.

A. Option a
B. Option b

C. Option c
D. Option d

C. $590,000.
D. $880,000.

83.Priscilla's Exotic Pets discounted a note receivable without recourse and the sales criteria were met. The

discounting is recorded as:

A. A secured borrowing.
B. Only note disclosure of the arrangement is required.
C. A sale.
D. None of the above.

97.In deciding whether financing with receivables is a secured borrowing or a sale under IFRS, t
he critical element is the extent to which:

A. The transferee has received substantially all the risks and rewards of ownership.
B. The age of the receivables transferred differs from the average age of the receivables.
C. The transferor of the receivable surrenders control over the assets transferred.
D. The transferee relies on funds from the transferor to maintain operations.

98.The purpose of assigning accounts receivable is to:

A. Satisfy a court order.

B. Complete the legal prerequisites to record their sale.
C. Comply with form and content rules of bankruptcy proceedings.
D. Provide collateral for a loan.

99.Ireland Corporation obtained a $40,000 note receivable from a customer on June 30, 2011. T
he note, along with interest at 6%, is due on June 30, 2012. On September 30, 2011, Ireland dis
counted the note at Cloverdale bank. The bank's discount rate is 10%. What amount of cash did
Ireland receive from Cloverdale Bank?

A. $40,600.
B. $36,000.
C. $39,220.

D. $36,820.

100.On April 1 of the current year, Troubled Company factored receivables with a carrying value
of $85,000 for $60,000 in cash from Scrooge Lenders. The transfer was made without recourse.
On April 1, Troubled would

A. Credit deferred interest expense for $25,000.

B. Credit factored accounts receivable for $85,000.
C. Debit discount on liability for $25,000.
D. Debit loss on sale of receivables for $25,000.

101.If a company adopts an accounts receivable factoring program, and accounts for the factorn
g as a sale of receivables, which of the following is true in the period the company starts the pro
gram (all else equal)?

A. The accounts receivable balance will increase.

B. Cash flow from operations may increase.
C. A retroactive restatement is necessary due to a change in accounting principle.
D. The factoring arrangement needs to be with a consolidated entity to qualify for sale accou

102.Assume a company has been maintaining a receivables factoring program for the past five
years, and has been experiencing the same level of sales, factoring and bad debts over that tim
e period. Customers typically pay their receivables within 60 days. Which of the following is true
with respect to the current period (all else equal)?

A. The accounts receivable balance will decrease.

B. Cash flow from operations is stable.

C. Net income is likely to decline.
D. Accounts receivable payable within 60 days cannot be factored

103.Which of the following is NOT true regarding accounting for transfers of receivables under IFRS?

A. Transfers of receivables sometimes are treated as a sale of receivables.

B. Transfers of receivables sometimes are treated as a secured borrowing.
C. Transfers of receivables can be treated as a sale if the transferee is a QSPE.
D. Transfer of substantially all the risk and rewards of ownership is an important consideration.

104.A company's investment in receivables is influenced by several variables, including:

A. The level of sales.

B. The nature of the product or service sold.
C. The credit and collection policies.
D. All of the above are correct.