F3

Question 1

Cash

Answer 1

Currency and demand deposits with banks

Question 2

Cash Equivalents

Answer 2

Short-term, highly liquid investments that can be coverted to cash (90 days)

Question 3

Two methods for the write-off of uncollectible

Answer 3

Direct Write off
Dr. BDE
Cr. AR

Allowance method
Dr. Allowance for uncollectible accounts
Cr. AR

Question 4

Two methods to estimate Uncollectible accounts

Answer 4

Percentage of AR at year-end

Aging of accounting receivable at year-end

Question 5

Allowance method - journal entries to provide for and write off an uncollectible account

Answer 5

Provide for
Dr. BDE
Cr. Allowance for uncollectible accounts

Write-off
Dr. Allowance for uncollectible accounts
Cr. AR

Question 6

Factoring with recourse

Answer 6

Factor can return the account to the company if it is uncollectible
Liability and risk of loss stays with the company

Question 7

Factoring without recourse

Answer 7

Factor assumes the risk of loss if the account is uncollectible

Question 8

At what value should non-interest-bearing promissory notes be recorded?

Answer 8

Prevent value of all future payments required by the note. The payments should be discounted at the market interest rate