Chapter 4-7 (test 2)

Differences in the company's cash balance and the bank's cash balance occur because of either timing differences or errors.

After preparing a bank reconciliation, a check outstanding for the payment of advertising would be recorded with a:

An NSF check is an example of a cash transaction that is initially recorded by the bank and later by the company after notification.

The following data were obtained from the bank statement and from the process of reconciling it: Bank service charges = $20 Deposit outstanding = $150 Interest earned on the bank account = $10 Checks outstanding = $400 Which items should be deducted from and added to the bank balance in completing the reconciliation?

Cash transactions recorded by the bank but not yet recorded by the company include all of the following except

What is the primary purpose of a bank reconciliation?

Which of the following would NOT need to be accounted for in a bank reconciliation?

The primary reason the balance of cash in the company's records will differ from the balance of cash in the bank's records includes:

Checks outstanding are checks the company has written that have not been subtracted from the bank's record of the company's balance.

Which of the following adjusts the company's balance of cash in a bank reconciliation?

Interest earned on a bank account is an example of a cash transaction recorded by the company and then later by the bank after notification.

Which of the following is correct with respect to a bank reconciliation?

Which of the following items would cause the balance of cash in the bank statement not to equal the balance of cash in the accounting records?

Cash receipts of the company that have not been added to the bank's record of the company's balance are referred to as checks outstanding.

When preparing a bank reconciliation, a deposit outstanding would be:

After preparing the bank reconciliation, an NSF check would result in which of the following when recording the adjustment to the company's cash balance?

Cash transactions that have been recorded by the company but not the bank include:

An example of a bank error that causes the company's balance and bank's balance of cash to differ is the purchase of supplies with a check.

Which of the following items would cause the balance of cash in the bank statement not to equal the balance of cash in the accounting records?

Which of the following items would cause the balance of cash in the bank statement to be greater than the balance of cash in the accounting records?

A check outstanding will cause the bank's cash balance to be higher than the company's cash balance.

After preparing a bank reconciliation, the service fee charged by the bank would be recorded with a:

A check outstanding will cause the bank's cash balance to be higher than the company's cash balance.

A deposit outstanding will cause the bank's cash balance to be higher than the company's cash balance.

A bank reconciliation reconciles the bank statement with the company's:

Which of the following adjusts the bank's balance of cash in a bank reconciliation?

After preparing a bank reconciliation, the collection of a note by the bank on a company's behalf would be recorded with a:

The final step in reconciling the bank's cash balance and the company's cash balance is to update the company's cash balance for the items used to reconcile the bank's cash balance.

A company collects an account receivable previously written off. Indicate how this transaction would affect (1) assets, (2) stockholders' equity, and (3) revenues.

The account "Allowance for Uncollectible Accounts" is classified as a(n):

Which of the following refers to the seller reducing the customer's balance owed because of some deficiency in the company's product or service?

The distinction between the direct write-off method and the allowance method is:

When a company provides services on account, which of the following accounts is debited?

Garber Plumbers offers a 20% trade discount when providing $2,000 or more of plumbing services to its customers. In March 2018, Garber provided $4,000 of plumbing services to Red Oak Inc., and $1,500 of services to Cyril Inc., Each of these customers was granted credit terms of 2/10, net 30. If both customers paid for the plumbing services within the discount period, what was the net revenues amount for these two transactions?

The direct write-off method is used when:

Credit sales are recorded as:

At December 31, Gill Co. reported accounts receivable of $256,000 and an allowance for uncollectible accounts of $1,400 (credit) before any adjustments. An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 4% of accounts receivable. The amount of the adjustment for uncollectible accounts would be:

Which of the following is recorded upon receipt of a payment on April 7, 2018, by a customer who pays a $900 invoice dated March 3, 2018, with terms 2/10, n/60?

One advantage of the allowance method for accounting for uncollectible accounts is that the company reports:

Shupe Inc. estimates uncollectible accounts based on the percentage of accounts receivable. What effect will recording the estimate of uncollectible accounts have on the accounting equation?

On March 17, Jackal Lumber sold building materials to Fredo Limited for $15,000 with terms of 3/10, net 20. What amount did Jackal record as revenue on March 25 when Fredo paid for the building materials?

Gershwin Wallcovering Inc. shipped the wrong shade of paint to a customer. The customer agreed to keep the paint upon being offered a 15% price reduction. The price reduction is an example of a:

Compared to other methods of estimating uncollectible accounts, the aging of accounts receivables method tends to:

If a company uses the allowance method of accounting for uncollectible accounts and collects cash on an account receivable previously written off:

A company records a sales return from a credit customer. Indicate how this transaction would affect (1) assets, (2) stockholders' equity, and (3) revenues.

A company provides services on account. Indicate how this transaction would affect (1) assets, (2) stockholders' equity, and (3) revenues.

Lail Inc. accounts for bad debts using the allowance method. On June 1, Lail Inc. wrote off Andrew Green's $2,500 account. Based on Lail's estimation, Andrew Green will never pay any portion of the balance in his account. What effect will this write-off have on Lail Inc.'s balance sheet at the time of the write-off?

Richard LLC accounts for possible bad debts using the allowance method. When an actual bad debt occurs, what effect does it have on the accounting equation?

A company's adjustment for uncollectible accounts at year-end would include a:

Prior to year-end adjusting entries, what would explain the Allowance for Uncollectible Accounts having a debit balance?

A sales discount is recorded by the seller as a(n)

A trade discount results in:

A company provides services to a customer in the current year and then determines in the following year that the customer's account needs to be classified as uncollectible. If the company uses the direct write-off method, which of the following would be recorded in the following year at the time of the write-off?

The purpose of recording an allowance for uncollectible accounts is to:

On January 18, a company provides services to a customer for $500 and offers the customer terms 2/10, n/30. Which of the following would be recorded when the customer remits payment on January 25?

Under the direct write-off method, uncollectible accounts are recorded:

At December 31, Gill Co. reported accounts receivable of $238,000 and an allowance for uncollectible accounts of $600 (credit) before any adjustments. An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 3% of accounts receivable. The amount of the adjustment for uncollectible accounts would be:

A company collects a customer's account within the discount period. Indicate how this transaction would affect (1) assets, (2) stockholders' equity, and (3) revenues.

When customers purchase products on account, Spitz Manufacturing offers them a 2% reduction in the amount owed if they pay within 10 days. This is an example of a:

Under the allowance method for uncollectible accounts, the balance of Allowance for Uncollectible Accounts increases when:

Tom's Textiles shipped the wrong material to a customer, who refused to accept the order. This is an example of a:

The amount of cash that is actually expected to be collected on accounts receivable is referred to as:

The first step in using a balance sheet approach to estimate bad debts is to calculate the desired ending balance in which account?

If a company uses the allowance method of accounting for uncollectible accounts and writes off a specific account:

The method of estimating uncollectible accounts based on the length of time the amount is owed by the customer is referred to as the: