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Unformatted text preview: Answer Key Version #1 UCSB 136a Version 1 --- mark on scantron!! Barrett Carrere Winter 2009 Mid Term #2 Chapters 6-9 Please put scantron inside front cover when turning in. ___________________________________________________________ Name, student id #, AM or PM class? Note: please turn in all to receive credit on test: 1) this test. 2) your green scantron – mark the version # on scantron right now please!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! You may remove the problem pages from the test if you like, however, please make sure you write your name on these sheets. Scoring key Possible Score Multiple choice 15 questions 150 Dollar value LIFO 50 Effective interest 88 Total 288 1. Which of the following is not considered cash for financial reporting purposes? 1 Answer Key Version #1 a. Petty cash funds and change funds b. Money orders, certified checks, and personal checks c. Coin, currency, and available funds d. Postdated checks and I.O.U.'s 7-21 D 2. The advantage of relating a company's bad debt expense to its outstanding accounts receivable is that this approach a. gives a reasonably correct statement of receivables in the balance sheet. b. best relates bad debt expense to the period of sale. c. is the only generally accepted method for valuing accounts receivable. d. makes estimates of uncollectible accounts unnecessary. 7-38 A 3. Which of the following is true when accounts receivable are factored without recourse? a. The transaction may be accounted for either as a secured borrowing or as a sale, depending upon the substance of the transaction. b. The receivables are used as collateral for a promissory note issued to the factor by the owner of the receivables. c. The factor assumes the risk of collectibility and absorbs any credit losses in collecting the receivables. d. The financing cost (interest expense) should be recognized ratably over the collection period of the receivables....
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This note was uploaded on 01/31/2010 for the course ECON 136A taught by Professor Anderson during the Winter '08 term at UCSB.
- Winter '08