Chapt 8 and 9 HW Questions ACCT370

1. Loans that are to be securitized are passed on to ____ _ _ _ _ _ ___. This helps ensure that if the lender goes bankrupt , it does not affect the credit status of the pooled loans . A. the originator B. a special - purpose entity C. the trustee D. a servicer E. the credit enhance

Question: Which of the following is not a control over debtors? a. investigation the credit worthiness of each other. b. sending out regular statements. c. monitoring all overdue accounts. d. paying within discount period. required: please answer this question by choosing the right options.

Managers wishing to avoid loan covenant violations may resort to making accounting changes that increase reported earnings. True or False?

Please explain in detail.  .  Unsecured creditors: have rights to be paid amounts owed, but the rights may have to be enforced through the courts face significant risk, and accordingly unsecured credit is very unusual have no rights in the event that the debtor defaults only have the recourse of severing business ties with the defaulting debtor

Choose the right one

1. How to record an amount due for customer that becomes definitely uncollectible? 2. How to record an amount due for customer that the entity might not be able to collect from customer? CHOICES for number 1 & 2: a. Dr Allowance for Bad Debts and Cr Cash b. Dr Allowance for Bad Debts and Cr Accounts Receivable c. Dr Bad Debt Expense and Cr Allowance for Bad Debts d. Dr Bad Debt Expense and Cr Cash 3. How to recognize the depreciation of an equipment? a. Dr Depreciation Expense and Cr Accumulated Depreciation b. Dr Accumulated Depreciation and Cr Depreciation Expense c. Dr Depreciation Expense and Cr Cash d. Dr Cash and Cr Accumulated Depreciation 4. How to record an expenses for which payment has not been made? a. Dr Expense and Cr Accounts Payable b. Dr Expense and Cr Accrued Expense Payable c. Dr Expense and Cr Cash d. Dr Expense and Cr Account Receivable

1. Loan workout specialists should not conduct a preliminary analysis of the problem and its possible causes and confer with the troubled customer quickly on the possible options, including any financial and operational restructuring. а. TRUE b. FALSE 2 Pyramiding of debt" refers to borrowing from one lender to repay another lender. а. FALSE b. TRUE 3 Loan workout personnel should ignore to conduct a tax and litigation search to check for any other unpaid liabilities of the borrower. а. FALSE b. TRUE 4The goal of all loan workouts should be to minimize the chances of recovery of funds а. FALSE b. TRUE

Which of the following does not relate to credit risks?  a. Credit risk is the possibility of losing a lender takes on due to the possibility of a borrower not paying back a loan b. It refers to the risk that a lender may not receive the owed principal and interest c. Credit risk also describes the risk that an insurance company will be able to pay a claim. d. Credit risk is the possibility of a loss resulting from a borrower's failure to repay a loan or meet contractual obligations e. Credit risk describes the risk that a bond issuer may fail to make payment when requested

An allowance for doubtful debts is created:     a. When debtors become bankrupt   b. When debtors cease to be in business   c. To provide for possible bad debts   d. To write off bad debts

Which accounting concept supports recording bad debt expense before accounts are actually uncollectible? a) Full disclosure principle b) Materiality concept c) Going concern concept d) Matching principle

IDENTIFICATION   1. These are obligations that exist on the balance sheet date although their amount is indefinite.    2. These are actually restrictions on the borrower as to undertaking further borrowings, paying dividends, etc.    3. These are articles of value given to customers as a result of past sales or sales promotion activities

Which of the following does not relate to credit risks?   Select one: A. Credit risk is the possibility of a loss resulting from a borrower's failure to repay a loan or meet contractual obligations B. Credit risk also describes the risk that an insurance company will be able to pay a claim. C. It refers to the risk that a lender may not receive the owed principal and interest D. Credit risk describes the risk that a bond issuer may fail to make payment when requested E. Credit risk is the possibility of losing a lender takes on due to the possibility of a borrower not paying back a loan

The objectives of Receivables Management are as follows:   a. All of above   O b. To maintain the debtors at minimum according to the credit policy offered to customers.   O C.   To control the cost of receivables, cost of collection, administrative expenses, bad debts and opportunity cost of funds blocked in the receivables.   O d. To obtain optimum (non maximum) value of sales;

Which of the following is correct regarding accrual basis of accounting?     a. No bad debts are recognized because trade receivables are not recognized. b. Accrual sales is equal to cash sales plus collection of trade receivables. c. Accrual purchases is equal to cash purchases less purchases on account. d. Doubtful accounts are treated as bad debts.

Which of the following relationships best describes the percentage of receivables basis of valuing accounts receivable? O A. Matching, emphasis on statement of financial position relationships. O B. Matching, emphasis on income statement relationships. Oc. Cash realizable value, emphasis on statement of financial position relationships. O D. Cash realizable value emphasis on income statement relationships.

Bad debt recovered is a payment received from account receivable from s client or customer whose account has been written off as bad debt O True O False

Which one of the following accounts is unlikely to ever be seperately disclosed in the income statement? O A. Cost of sales O B. Bad debts O C. Interest on current bank account O D. Depreciation

The purpose of a negative pledge on the borrower's assets in an unsecured bank loan agreement is to

8. When specified receivables are used to secure for a loan on a notification basis, which accounting treatment is required?   Only a note to financial statement is required The borrower  notifies the debtor that their receivables were assigned the borrower should not notify the debtor that their receivables were assigned Notify the debtor that their receivable was sold

Introduction: Warranty liabilities are a crucial aspect of financial reporting, representing the estimated future costs that a company expects to incur related to warranties provided with its products or services. Proper accounting for warranty liabilities is essential for accurate financial statements and ensuring transparency for investors and stakeholders. Background: Let's consider XYZ Electronics, a leading manufacturer of consumer electronics. The company sells various electronic gadgets with warranties ranging from 1 to 3 years, depending on the product. To account for warranty liabilities, XYZ Electronics follows the accrual basis of accounting, recognizing the estimated future costs associated with warranties at the time of sale. Recording Warranty Liabilities: When a product is sold, XYZ Electronics estimates the future warranty costs based on historical data, industry standards, and its own experience with product failures. The estimated warranty expense is then recorded as…

Question 1: Why do we need to estimate doubtful accounts?Question 2: Which is better to have? Accounts receivable or notes receivable? And why?Question 3: What happens if companies use the direct write-off method in accounting for bad debts? What will be the effect in the financial statements? Question 4: What is the relationship of the promissory note between the maker and the payee?

2. Which is a valid statement regarding recognition of liabilities? * a. A non-interest bearing note is initially recognized at face value. b. A provision should not be O recognized for future operating losses. c. For accumulating compensated absences, an entity should recognize the expense and related liability during the period the absences are incurred by the employees. d. The estimated future costs of supplying awards for customer loyalty program shall be recognized as an expense in the period the award credits are availed of by customers.

Which of the following is the incorrect statement about Banking? Banking relates with lending money for personal need for profit Banks provides equipment purchase loan The Banks helps to give long term and short-term loans only Issuing cheques is the secondary objective of banking

3. Which of the following is inappropriate aggregation? A. Cash and cash equivalents (Cash on hand and time deposits) B. Trade. and other receivables (Notes receivable and advances to employees) C. Trade and other payables (Notes and bonds payable) D. Provisions (Liability from pending litigation and purchase

Which one of the following statements is false?a. Consumer loans are loans banks advance to individuals.b. Loans are classed as liabilities on a bank’s balance sheet.c. Loans are classed as assets on a bank’s balance sheet.d. Deposits are classed as liabilities on a bank’s balance sheet.

8. The timing of income from services can often be controlled through the use of: a.U.S. GAAP accounting. b.The cash method of accounting. c.Service accounting. d.The accrual method of accounting. e.IFRS accounting.   9. The primary purpose of the imputed interest rules is to prevent income shifting via interest-free loans. True False

Statement 1: In case there is a credit balance in a customer's account, such amount shall not affect the total balance of the accounts receivable to be presented in the asset section of the statement of financial position.Statement 2: A credit balance in a customer's account is caused by overcollection of amounts receivable from customers which will result to a liability to be presented in the noncurrent section of statement of financial position.Which statement(s) is(are) correct?