1.BSP treasury bill with only three months remaining before maturity can also be classified as cash equivalent even if it purchased one year ago. TRUE FALSE

2.On October 1 of the current year, an entity received a one-year note receivable bearing interest at the market rate. The face amount of the note receivable and the entire amount of the interest are due on September 30 of next year. The interest receivable on December 31 of the current year would consist of an amount representing. Three months of accrued interest income Twelve months of accrued interest income Nine months of accrued interest income The excess on October 1 of the present value of the note receivable over its face amount.

3.Estimation of doubtful accounts may be based upon the amount of sales or amount of receivables. FALSE TRUE

4.A proof of cash cannot detect a theft of cash when the cash was stolen before being recorded. TRUE FALSE

5.Companies record and report long-term notes receivable at the present value of the cash they expect to collect. FALSE TRUE

6.When the estimate of doubtful receivables is developed, Doubtful Accounts Expense is debited and Allowance for Doubtful Accounts is credited for an amount to bring the allowance to the required balance. FALSE TRUE

7.Petty cash fund is the money set aside to pay small expenses. FALSE TRUE

8.On July 1 of the current year, an entity obtained a two-year 8% note receivable for services rendered. At that time, the market rate of interest was 10%. The face amount of the note and the entire amount of interest are due on the date of maturity. Interest receivable on December 31 of the current year is 5% of the present value of the note 4% of the present value of the note 5% of the face amount of the note 4% of the face amount of the note

9.Entry if cash is deposited into the bank by the point of view of the bank? Dr Cash; Cr Entity's Account Dr Cash in Bank; Cr Cash on Hand Dr Cash in Bank; Cr Bank Dr Cash; Cr Cash in Bank

10.Bank overdraft is permitted in the Philippines. TRUE FALSE

11.Cash subject to any restriction can be reported as cash. FALSE TRUE

12.Notes receivable are generally reported as non-current assets. TRUE FALSE

13.Receivables might be sold to finance companies at an amount greater than cash realizable value. lengthen the cash-to-cash operating cycle. generate cash quickly. take advantage of deep discounts on the cash realizable value of receivables.

14.Which of the following has an effect of decreasing the bank balance when reconciled? Credit Memo Bank Service Charge Collection of loan Outstanding Check

15.What is the major purpose of the petty cash fund? To determine honesty of the employees To ease the payment of cash to vendors To effectively plan cash inflow and outflows To effectively control cash disbursement

16.Which is true about accounts receivable? They are non-earning assets so firms avoid having them. They are generated when a firm sells goods on credit. They discourage sales. They meet immediate obligations.

17.Which of the following is true when accounts receivable are factored without recourse? The financing cost (interest expense) should be recognized ratably over the collection period of the receivables. The receivables are used as collateral for a promissory note issued to the factor by the owner of the receivables. The transaction may be accounted for either as a secured borrowing or as a sale, depending upon the substance of the transaction. The factor assumes the risk of collectability and absorbs any credit losses in collecting the receivables.

18.Red Company purchased from Green Company a P400,000, 8%, five-year note that requires five annual year-end installments of 100, 180. The note was discounted to yield a 9% rate to Red. At the date of purchase, Red recorded the note in its present value of P389,700. What is the total unearned interest income will be realized over the term of the financial instrument? 180,000 160,000 111,200 100,900

19.On January 1, 2019, Marr Co. exchanged equipment for a P400,000 zero-interest-bearing note due on January 1, 2022. The prevailing rate of interest for a note of this type at January 1, 2019 was 10%. The present value of 1 at 10% for three periods is 0.75. What amount of interest revenue should be included in Marr's 2020 income statement? 0 30,000 40,000 33,000

20.In the percentage of sales method, the allowance balance before adjustment is ignored as the resulting amount is already the amount of doubtful accounts expense. FALSE TRUE

21.Which of the following has an effect of decreasing the book balance when reconciled? Credit Memo Bank Service Charge Collection of loan Outstanding Check

22.When there is considerable fluctuation in the proportion of cash and credit sales, the total sales can be used as the basis to get the doubtful accounts expense to avoid unsatisfactory results. TRUE FALSE

23.If a company sells its accounts receivables to a factor, the seller defers recognition of sales revenue until the account is collected. there is a gain on the sale of the receivables. the factor pays a commission to the seller. the seller pays a commission to the factor.

24.If direct origination costs exceed origination fees received, difference is charged to direct organization costs and amortization will decrease interest income. FALSE TRUE

25.Adjustments relating to failure of estimation of doubtful accounts are considered as a change in accounting policy. TRUE FALSE