result of sales on credit or on account is a bad debts expense. 2. What is the purpose of the Allowance for Doubtful Accounts? This account is a contra-asset account that accumulates the expected amount of bad debts as of a given date. This account is also a permanent account that is not closed to Income Summary at the end of the year. 3. What is net realizable value? Net realizable value is the amount of accounts receivable that is expected to be collected
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Case: Island Trading Co.‚ a client of your CPA firm‚ has requested your advice on the following problems. It has three clerical employees who must perform the following functions: 1) maintain general ledger. 2) Maintain accounts payable ledger. 3) Maintain accounts receivable ledger. 4) Maintain cash disbursements journal and
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disposition of accounts receivables? What is their function? Since the majority of US thrive on the use of credit cards‚ the accounts receivables for a company may no longer be on a cash-to-cash basis. A company may need to sell these accounts to other companies who specialize in handling accounts receivables if they need cash more quickly or if it would be too costly to perform the necessary billing to collect on the account. The entries used to record the disposition when the receivables are sold
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|1. |Notes Receivable and Accounts Receivable can also be called trade receivables. |True False | |2. |Receivables not currently collectible are reported in the investments section of the balance sheet. | | | | |True False |
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related to the follow areas: * Segregation of Duties * Lack of Internal Control - Lack of control on main production for the company. - Lack of control in accounting records procedure - Lack of control in handling and recording accounts receivable *
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TEST OF CONTROLS – REVENUE TRANSACTIONS |Audit Objective |Audit procedure |Findings | |General | | | |Validity |Observe
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Employees 7. Financing activities involve obtaining __________ to operate a business. a. products b. customers c. business incentives d. funds 8. When a business borrows money‚ it incurs a(n) a. tax. b. liability. c. receivable. d. additional equity. 9. Shares of ownership are evidenced by issuing a. bonds payable. b. commercial paper. c. shares of stock. d. notes payable. 10. The resources a business owns are called a. assets. b. liabilities
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savings accounts. b. money orders from customers. c. compensating balances. d. IOUs from customers. ANS: D PTS: 1 OBJ: LO1 NAT: AACSB correlation: analytic LOC: Learning Type: Recall KEY: cash and cash equivalents 2. A company’s acceptance of credit cards like Visa is an example of a. securitization. b. factoring with recourse. c. discounting. d. factoring without recourse. ANS: D PTS: 1 OBJ: LO1 NAT: AACSB correlation: analytic LOC: Learning Type: Comprehension KEY: financing receivables 3
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explanations. (Note‚ enter all accounts in one box. The dates have been included to help with formatting). Date Account Titles and Explanation Debit Credit 1 Accounts Receivable Sales Revenue $3‚600‚000 $3‚600‚000 (To record sales on account) 2 Sales Returns and Allowances Accounts Receivable $150‚000 $150‚000 (To record merchandise returned) 3 Cash Accounts Receivable $3‚100‚000 $3‚100‚000
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intermediate 1 points Save Remington Corporation had accounts receivable of $100‚000 at 1/1. The only transactions affecting accounts receivable were sales of $600‚000 and cash collections of $550‚000. The accounts receivable turnover is A. 4.0. B. 4.8. C. 4.4. D. 6.0. 1 points Save The percentage-of-receivables approach of estimating uncollectible accounts emphasizes matching over valuation of accounts receivable. True False 1 points Save Which
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