CHAPTER 7CASH AND RECEIVABLESTRUE-FALSEConceptualAnswe No! Desc"pt"onT 1. Items considered cash.F 2. Items considered cash.F 3. Items considered cash.F 4. Cash equivalents definition.F 5. Bank overdrafts.T 6. Cash equivalents.F . Classification of receiva!les.F ". Items considered trade receiva!les.T #. Trade discount uses.T 1$. %ales discounts. T 11. &aluation of receiva!les.F 12. 'ercenta(e)of)receiva!les a**roach.F 13. 'ercenta(e)of)sales method.T 14. +e*ortin( notes receiva!le.F 15. %tated interest rate vs. effective rate.F 16. Classification of notes receiva!le.T 1. +ecourse lia!ilit,.F 1". Bu,in( receiva!les -ith recourse.T 1#. %ellin( receiva!les -ith recourse.F 2$. Com*utin( receiva!les turnover.#ULTIPLE CH$ICEConceptualAnswe No! Desc"pt"ond 21. Identification of cash items.! 22. Identification of cash items.d 23. Classification of travel advance.d'24. Items included as cash.d%25. Cash equivalent definition.d 26. Classification of !ank overdraft.d 2. Classification of com*ensatin( !alances.d 2". .efinition of trade receiva!les.d 2#. Identification of trade receiva!les.c%3$. 'resentation of nontrade receiva!les.d%31. Cash discount definition.d'32. Trade discount uses.a 33. Classification of sales discounts.c 34. &aluation of short)term receiva!les.d 35. Bad de!t *rovision and the matchin( conce*t.a 36. Bad de!ts as a *ercenta(e of sales.Test Ban% &o Inte'e("ate Account"n)* Twel&t+ E("t"on#ULTIPLE CH$ICEConceptual,cont!-Answe No! Desc"pt"on! 3. Bad de!ts as a *ercenta(e of sales.a 3". Bad de!ts as a *ercenta(e of receiva!les.d 3#. Financial statement effect of a note recorded incorrectl,.c 4$. Factorin( accounts receiva!le -ithout recourse.c%41. Classification of accounts and notes receiva!le.a%42. Transfer of receiva!les -ith recourse.a'43. /ccounts receiva!le turnover ratio.d 44. /ccounts receiva!le turnover ratio.c 045. 1ntr, to re*lenish 'ett, Cash.c 046. 'ur*ose of Cash 2ver 3 %hort account.! 04. Classification of !ank service char(es.c 04". Treatment of !ank credits on !ank reconciliation.' These questions also a**ear in the 'ro!lem)%olvin( %urvival 4uide.% These questions also a**ear in the %tud, 4uide.0 This to*ic is dealt -ith in an /**endi5 to the cha*ter.#ULTIPLE CH$ICECo'putat"onalAnswe No! Desc"pt"ond 4#. Calculate effective interest on loan -ith required com*ensator, !alance.! 5$. +e*ortin( cash.c 51. Cash and cash equivalents.! 52. +e*ortin( cash.c 53. Cash and cash equivalents.c 54. .etermine effective annual interest rate of sales discount.! 55. Calculate !alance of accounts receiva!le.! 56. Calculate net reali6a!le value of accounts receiva!le.d 5. Calculate net reali6a!le value of accounts receiva!le.c 5". Calculate !ad de!t e5*ense usin( a(in( of receiva!les.! 5#. Calculate !ad de!t e5*ense usin( *ercent of sales.a 6$. Calculate !ad de!t e5*ense usin( *ercent of receiva!les.! 61. &aluation of accounts receiva!le.! 62. Calculation of !ad de!t e5*ense.d 63. Calculate /llo-ance for .ou!tful /ccounts !alance.! 64. &aluation of accounts receiva!le.! 65. Calculation of !ad de!t e5*ense.d 66. Calculate /llo-ance for .ou!tful /ccounts !alance.! 6. .etermine a**ro*riate interest rate for a 6ero)interest)!earin( note.a 6". Calculate *resent value of a 6ero)interest)!earin( note.c 6#. Calculate cash *roceeds from transfer of receiva!les.c $. 1ntr, to record collection of assi(ned receiva!les.! 1. Factorin( receiva!les -ithout recourse.! 2. Factorin( receiva!les -ith recourse.c 3. Calculate loss on sale of receiva!les.c 4. Calculate loss on sale of receiva!les.c 5. Calculate accounts receiva!le turnover.c 6. Calculate accounts receiva!le turnover.7 - .Cash and +eceiva!les#ULTIPLE CH$ICECo'putat"onal,cont!-Answe No! Desc"pt"ond 0. 1ntr, to re*lenish *ett, cash.! 0". Calculate correct !alance in !ank account.! 0#. Calculate correct cash !alance.c 0"$. Calculate correct cash !alance.! 0"1. Calculate correct cash !alance.c 0"2. Calculate correct cash !alance.#ULTIPLE CH$ICECPA A(apte(Answe No! Desc"pt"ona "3. .etermine current net receiva!les.d "4. Calculate ad7ustment for !ad de!ts.d "5. Calculate !ad de!t e5*ense.! "6. Calculate ad7ustment to -rite off !ad de!ts.c ". 1ffect of a -rite)off under the allo-ance method.d "". .etermine !alance in the /llo-ance for .ou!tful /ccounts.c "#. .etermine interest revenue of a 6ero)interest)!earin( note.c #$. .etermine interest receiva!le at ,ear end.! #1. /ssi(nment and factorin( of accounts receiva!le.a 0#2. Calculate correct cash !alance.a 0#3. Calculate the cash !alance *er !ooks.E/ERCISESIte' Desc"pt"on1)#4 /sset classification.1)#5 /llo-ance for dou!tful accounts.1)#6 1ntries for !ad de!t e5*ense.1)# /ccounts receiva!le assi(ned.PR$BLE#SIte' Desc"pt"on')#" 1ntries for !ad de!t e5*ense.')## /morti6ation of discount on note.')1$$ /ccounts receiva!le assi(ned.0')1$1 Factorin( accounts receiva!le.0')1$2 Bank reconciliation.7 - 0Test Ban% &o Inte'e("ate Account"n)* Twel&t+ E("t"onCHAPTER LEARNIN1 $B2ECTIVES1. Identif, items considered as cash.2. Indicate ho- to re*ort cash and related items.3. .efine receiva!les and identif, the different t,*es of receiva!les.4. 15*lain accountin( issues related to reco(nition of accounts receiva!le.5. 15*lain accountin( issues related to valuation of accounts receiva!le.6. 15*lain accountin( issues related to reco(nition of notes receiva!le.. 15*lain accountin( issues related to valuation of notes receiva!le.". 15*lain accountin( issues related to dis*osition of accounts and notes receiva!le.#. 15*lain ho- to re*ort and anal,6e receiva!les.01$. 15*lain common techniques em*lo,ed to control cash.SU##AR3 $F LEARNIN1 $B2ECTIVES B3 4UESTI$NSItem Type Item Type Item Type Item Type Item Type Item Type Item TypeLean"n) $56ect"7e 81. TF 2. TF 3. TF 21. 8C 22. 8C 23. 8C'24. 8CLean"n) $56ect"7e .4. TF 6. TF 26. 8C 4#. 8C 51. 8C 53. 8C5. TF%25. 8C 2. 8C 5$. 8C 52. 8C #4. 1Lean"n) $56ect"7e 0. TF ". TF 2". 8C 2#. 8C%3$. 8CLean"n) $56ect"7e 9#. TF 1$. TF%31. 8C'32. 8C 33. 8C 54. 8C "3. 8CLean"n) $56ect"7e :11. TF 35. 8C 55. 8C 5#. 8C 63. 8C "4. 8C "". 8C12. TF 36. 8C 56. 8C 6$. 8C 64. 8C "5. 8C #5. 113. TF 3. 8C 5. 8C 61. 8C 65. 8C "6. 8C #6. 134. 8C 3". 8C 5". 8C 62. 8C 66. 8C ". 8C #". 'Lean"n) $56ect"7e ;14. TF 16. TF 6. 8C "#. 8C ##. '15. TF 3#. 8C 6". 8C #$. 8CLean"n) $56ect"7e