ACC301-Ch-7-quiz

ACC301-Ch-7-quiz - ACC 301 Chapter 7 Quiz Multiple Choice Identify the letter of the choice that best completes the statement or answers the

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ACC 301 Chapter 7 Quiz Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. An operating cycle a. is twelve months or less in length. b. is the average time required for a company to collect its receivables. c. is used to determine current assets when the operating cycle is longer than one year. d. begins with inventory and ends with cash. ____ 2. If the balance shown on a company's bank statement is less than the correct cash balance, and neither the company nor the bank has made any errors, there must be a. deposits credited by the bank but not yet recorded by the company. b. outstanding checks. c. bank charges not yet recorded by the company. d. deposits in transit. ____ 3. The FASB specified in Statement No. 125 three conditions that must be met if a transfer of receivables is to accounted for as a sale. Which of the following is not one of the three conditions specified? a. The transferred assets have been isolated from the transferor. b. The transferor's obligation under the recourse provisions can be reasonably estimated. c. The transferee has the right to pledge or exchange the transferred assets. d. The transferor does not maintain effective control over the assets through an agreement to repurchase the assets before their maturity. ____ 4. When a specific customer's account is written off by a company using the allowance method, the effect on net income and the net realizable value of the accounts receivable is Net Realizable Value Net Income of Accounts Receivable a. None None b. Decrease Decrease c. Increase Increase d. Decrease None ____ 5. Which of the following factors are used to compute the number of days' sales in accounts receivable? a. Inventory turnover and 365 days b. Net sales and average inventory c. Accounts receivable turnover and 365 days d. Average accounts receivable and cost of goods sold ____ 6. First Company sold merchandise on credit to Second Company for $1,000 on July 1, with terms of 2/10, net /
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This note was uploaded on 06/11/2009 for the course ACC 301 taught by Professor Pendarvis during the Spring '09 term at St. Leo.

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ACC301-Ch-7-quiz - ACC 301 Chapter 7 Quiz Multiple Choice Identify the letter of the choice that best completes the statement or answers the

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