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FAR4 > Working Capital and its Components > Flashcards

Working Capital and its Components Flashcards

1
Q

Working capital is a measure of ______

A

solvency

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2
Q

Cash surrender of life insurance is a current _____

A

asset

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3
Q

Deferred revenues are current ______

A

liabilities

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4
Q

Under GAAP, a short-term obligation may be excluded from current liabilities and included in noncurrent debt if the company ______ to ______ on a long-term basis and the intent is supported by the ability to do so and evidence supports it

A

intends; refinance

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5
Q

Reclassification of short-term liability to long-term liability JE

A

DR: short-term liability
CR: long-term liability

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6
Q

Under IFRS, short-term obligations expected to be refinanced on a long-term basis may ______ classified as noncurrent

A

not be

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7
Q

Deposits held as compensating balances that are not legally restricted are included in:

A

cash and cash equivalents

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8
Q

Deposits in transit are:

A

added to bank

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9
Q

Outstanding checks are:

A

subtracted from bank

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10
Q

service charges are:

A

subtracted from books

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11
Q

Bank collections are:

A

added to books

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12
Q

Errors are:

A

added/subtracted from either

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13
Q

NSF are:

A

subtracted from books

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14
Q

Interest income is:

A

added to books

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15
Q

Accounts receivable are _____ promises to pay debts

A

oral

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16
Q

Beg balance and credit sales are ______ to the A/R T account

A

debits

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17
Q

Write-offs, note conversions, and cash collected are ____ to the A/R T account

A

credits

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18
Q

____ _______ _____ of accounts receivable is the balance of the accts rec account adjusted fro allowances for receivables that may be uncollectible, sales discounts, and sales returns and allowances

A

net realizable value

19
Q

Discount method that records a sale without regard to the available discount

A

gross method

20
Q

Discount method that records sales and accounts receivable net of the available discount

A

net method

21
Q

Trade discounts are applied _______

A

sequentially

22
Q

Expected exchanges _______ affect sales, inventory, or COGS

A

do not

23
Q

If past experience shows that material percentage of receivables are returned, an __________ for sales returns should be established

A

allowance

24
Q

JE to record a sales return

A

DR: Sales returns & allowances
CR: Accts rec

25
Q

The _______ method of recognizing uncollectible accounts receivable is GAAP

A

allowance

26
Q

Allowance for uncollectible accounts is a _______ asset

A

contra

27
Q

% of ______, % of ___ ____, and aging ____ _____ are the three methods of the allowance method

A

sales; accts rec; accts rec

28
Q

% of sales emphasizes _______

A

matching

29
Q

Gross A/R - required ending allowance =

A

NRV

30
Q

Write offs are a ______ to the allowance T chart

A

debit

31
Q

Beg. balance, recoveries, and the current year bad debt expense are ______ to the allowance T chart

A

credits

32
Q

Under the aging of receivables method, the sum of the product for each aging category will be the desired _______ ______ in the allowance account

A

ending balance

33
Q

When a receivable is deemed uncollectible, this JE is made:

A

DR: allowance for doubtful accounts
CR: accts rec

34
Q

JE to restore an account previously written off

A

DR: accts rec
CR: allowance for uncollectible accts

35
Q

JE to record increase in allowance account

A

DR: bad debt expense
CR: allowance for uncollectible accts

36
Q

Pledging uses exists accts rec as _________

A

collateral

37
Q

Pledging requires only _____ _____

A

note disclosure

38
Q

Pledging JE:

A

DR: cash
CR: note payable

39
Q

Factoring accts rec without recourse is a true:

A

sale

40
Q

Factoring of accts rec with recourse can be either a:

A

sale or loan

41
Q

Notes receivable are ______ promises to pay a debt

A

written

42
Q

Notes receivable are stated at ______ ______

A

present value

43
Q

Discounting of notes receivable is the same as the ______ of accts rec

A

factoring

FAR4 (5 decks)

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