Financial Accounting 1

4806 Words Feb 8th, 2013 20 Pages
Multiple Choice:

1. In general terms, financial assets appear in the balance sheet at:

a. Face value

b. Current value

c. Cost

d. Estimated future sales value

2. Which of the following practices contributes to efficient cash management?

a. Never borrow money – maintain a cash balance sufficient to make all necessary payments.

b. Record all cash receipts and cash payments at the end of the month when reconciling the bank statements.

c. Prepare monthly forecasts of planned cash receipts, payments, and anticipated cash balances up to a year in advance.

d. Pay each bill as soon as the invoice arrives.

3. Each of the following measures strengthens internal control over cash
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9. Which of the following actions is least likely to increase a company’s accounts receivable turnover?

a. Encouraging customer’s to use bank credit cards, such as VISA and MasterCard, rather than other national credit cards, such as American Express.

b. Offer customers larger cash discounts for making early payments.

c. Reduce the interest rate charged to credit customers.

d. Sell accounts receivable to a factor.

10. On October 1, 2011, Coast Financial loaned Barr Corporation $300,000, receiving in exchange a nine-month, 12 percent note receivable. Coast ends its fiscal year on December 31 and makes adjusting entries to accrue interest earned on all notes receivable. The interest earned on the note receivable from Barr Corporation during 2012 will amount to:

a. $9,000

b. $18,000

c. $27,000

d. $36,000

11. Puget Sound Co. sold marketable securities costing $80,000 for $92,000 cash. In the company’s income statement and statement of cash flows, respectively, this will appear as:

a. A $12,000 gain and a $92,000 cash receipt.

b. A $92,000 gain and an $8,000 cash receipt.

c. A $12,000 gain and an $80,000 cash receipt.

d. A $92,000 sale and a $92,000 cash receipt.

12. The primary purpose for using an inventory cost flow assumption is to:

a. Parallel the physical flow of units of merchandise.

b. Offset against revenue an appropriate cost of goods sold.