Question : 41.A company that maintains a cash balance of more than : 1253649

 

41.A company that maintains a cash balance of more than is necessary for its day-to-day needs

a.is likely to have cash flow problems.

b.is not using working capital to its ideal advantage.

c.is likely to have a very low solvency.

d.has a problem with physical controls.

42.Accounts used to cover day-to-day office expenses are referred to as

a.petty cash.

b.bad debts.

c.cash restrictions.

d.compensating balances.

43.A cash discount differs from a trade discount in that the cash discount is

a.a reduction in the per unit price of an item if a certain quantity is purchased.

b.received in currency instead of by a check from the customer.

c.typically associated with consumers and a trade discount associated with commercial vendors or suppliers.

d.the same as a mark down.

44.The gross method refers to

a.a method of accounting for uncollectible accounts.

b.the expectation that the customer will not take advantage of a cash discount.

c.a method of reporting cash on the balance sheet.

d.the restriction placed on the company’s bank account by the bank.

45.An exchange rate

a.is the cash amount received from a customer who takes advantage of a cash discount.

b.is the value of one currency in terms of another currency.

c.seldom varies from one accounting period to the next.

d.is ignored by multinational companies.

46.Hedging is used to

a.reduce risks associated with holding receivables denominated in foreign currencies.

b.calculate the current ratio for multinational companies.

c.translate foreign currency into U.S. dollars.

d.‘window dress’ uncollectible accounts.

47.Tyson Corp. uses the aging method to estimate bad debts. The bookkeeper provided the following schedule as of March 30th, 2010:

Account Age

Balance

Noncollection Probability

Current

$50,000

3%

1 — 30 days past due

40,000

4%

31 — 60 days past due

10,000

8%

Over 60 days past due

5,000

15%

What is the amount of receivables deemed uncollectible?

a.$1,650

b.$4,650

c.$3,400

d.$105,000

48.At the beginning of 2010, Cyrus Corp.’s allowance for doubtful accounts is $12,500.

During 2010, $4,250 was written off as uncollectible. At December 31, the company used an aging schedule of accounts receivable and determined that $10,530 of the accounts receivable would probably be uncollectible. What would be the bad debts expense that should be reported on Cyrus’s 2010 income statement?

a. $5,720

b. $26,780

c. $2,280

d.$18,280

49.Before adjusting entries, Kilby Corp’s accounts receivable and allowance for doubtful accounts are $745,000 and $7,000 (credit balance), respectively. Using an aging schedule of accounts receivable, it is determined that $60,000 of the accounts receivable would probably be uncollectible. Calculate the net realizable value of Truman’s receivables at year end.

a. $681,000

b. $695,000

c. $809,000

d. $685,000

50.The following information concerning the current assets and current liabilities of

Mason Company at December 31, 2010, is presented below.

 

Current Assets

 

 

 

Cash

 

$6,700

 

Accounts Receivable

$7,900

 

 

Less Allowance

(70)

7,830

 

Inventory

 

2,270

 

Prepaid expenses

 

500

Total

 

$17,300

 

Current Liabilities

 

 

 

Accounts payable

 

$9,000

 

Wages payable

 

500

 

Taxes payable

 

200

 

Rent payable

 

1,600

 

Notes payable

 

2,000

Total

 

$13,300

 

Based on this information, how would the current ratio be affected if Masoncollects the accounts receivable and then uses some of the cash to pay off the accounts payable?

a. The current ratio would increase from 1.30 to 1.93.

b. The current ratio would increase from 0.74 to 4.02.

c. The current ratio would decrease from 1.30 to 0.62.

d. The current ratio would increase from 1.09 to 1.61.

 

 

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