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Chapter 4-6 (Final Exam Accounting 1 - Part 1) > Chapter 4 - Cash and Receivables > Flashcards

Chapter 4 - Cash and Receivables Flashcards

1
Q

Deposits in Transit

A

Add in Bank Balance

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2
Q

Outstanding Cheques

A

Subtract in Bank Balance

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3
Q

Bank Errors

A

Add or Subtract in Bank Balance

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4
Q

Bank Collection

A

Add in Book Balance

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5
Q

Interest Revenue

A

Add in Book Balance

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6
Q

ETF Receipts

A

Add in Book Balance

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7
Q

Services Charges

A

Subtract in Book Balance

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8
Q

NSF Cheques

A

Subtract in Book Balance

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9
Q

EFT Payments

A

Subtract in Book Balance

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10
Q

Book Errors

A

Subtract or Add in Book Balance

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11
Q

Separate Account in General Ledger for Each Customer

A

Subsidiary Ledger

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12
Q

Most Used Method to Estimate Uncollectibles - Balance Sheet Approach

A

Aging-of-receivables

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13
Q

Record an Allowance for Uncollectibles Accounts

A

DR Debt Expenses
CR Allowance for Uncollectible Accounts

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14
Q

Record a Write-off for Uncollectible Accounts

A

DR Allowance for Uncollectible Accounts
CR Accounts Receivable
(the opposite when you receive the money unexpected)

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15
Q

Promissory Note - Creditor

A

Lender

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16
Q

Promissory Note - Debtor

A

Maker, borrower

17
Q

Promissory Note - Principal

A

Amount borrowed by debtor

18
Q

Promissory Note - Term

A

Length of Time the Debtor has to repay the Note

19
Q

Record a payment of a Promissory Note

A

DR Cash
CR Notes Receivable (Principal)
CR Interest Receivable
CR Interest Revenue (the remaining int. revenue)

20
Q

Record a Purchase in Credit Card

A

DR Cash
DR Credit Card Fee
CR Sales Revenue

21
Q

Record a Purchase in Debit Card + Cashback

A

DR Cash
DR Interac-Fee
CR Sales Revenue
CR Cash (to cardholder)

22
Q

Selling Factoring Receivables

A

DR Cash
DR Finance Expense
CR Accounts Receivable

A company sells receivable to a factor, which pays a discounted price. The company receives immediate cash.

23
Q

Current Ratio

A

Total Current Assets / Total Current Liabilities

24
Q

Acid-Test (or Quick) ratio

A

Cash+Short-Term Investments+Net Current Receivables / Total Current Liabilities

The Higher, easier to pay current liabilities.
At least 1.0 to be safe, must be not too high. Because Cash does not earn a lot of return.

25
Q

Days’ Sales Receivables

A

How long it takes to collect its average level of receivables

Average Daily Sales = Net Sales in a Year / 365 days

Days’ Sales in Average Receivables = Average Receivables ( Begg. Net Receivables + End. Net Receivables) / Average Daily Sales

Short is better.

26
Q

Method to Estimate Uncollectibles - Income Statement Approach

A

% Sales
DR Bad Debt Expenses
CR Allowance for Doubtful Account (ADFA)

Chapter 4-6 (Final Exam Accounting 1 - Part 1) (3 decks)

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