CHAPTER 7 CASH AND RECEIVABLES IFRS questions are available at the end of this chapter WITH CORRECT ANSWERS

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7. All claims held against customers and others for money, goods, or services are reported as current assets. Ans: F, LO: 2, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: Analytic, AICPA BB: None, ... AICPA FN: Reporting, AICPA PC: Communication, IMA: Reporting, IFRS: None 8. Trade receivables include notes receivable and advances to officers and employees. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA BB: None, AICPA FN: Reporting, AICPA PC: Communication, IMA: Reporting, IFRS: None 9. Trade discounts are used to avoid frequent changes in catalogs and to alter prices for different quantities purchased. Ans: T, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA BB: None, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Reporting, IFRS: None 10. In the gross method, sales discounts are reported as a deduction from sales. Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA BB: None, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Reporting, IFRS: None 11. The net amount reported for short-term receivables is not affected when a specific account receivable is determined to be uncollectible. Ans: T, LO: 3, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: Analytic, AICPA BB: None, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Reporting, IFRS: None 12. The percentage-of-receivables approach of estimating uncollectible accounts emphasizes matching over valuation of accounts receivable. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA BB: None, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Reporting, IFRS: None 13. The percentage-of-receivables approach requires companies to set up an aging schedule of accounts receivable. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA BB: None, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Reporting, IFRS: None 7 - 7 Test Bank for Intermediate Accounting, Sixteenth Edition 14. Companies value and report short-term receivables at net realizable valuethe net amount they expect to receive in cash. Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA BB: None, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Reporting, IFRS: None 15. The percentage-of-receivables approach is used for impairment measurement and reporting. Ans: F, LO: 3, Bloom: K, Difficulty: Moderate, Min: 1, AACSB: Analytic, AICPA BB: None, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Reporting, IFRS: None 16. Companies record and report long-term notes receivable at the present value of the cash they expect to collect. Ans: T, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA BB: None, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Reporting, IFRS: None 17. When the stated rate of interest exceeds the effective rate, the present value of the note receivable will be less than its face value. Ans: F, LO: 4, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: Analytic, AICPA BB: None, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Reporting, IFRS: None 18. The FASB believes that historical cost for financial instruments provides more relevant and understandable information than fair value. Ans: F, LO: 5, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: Analytic, AICPA BB: None, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Reporting, IFRS: None 19. Recognition of a recourse liability will make a loss on sale of receivables larger than it would otherwise have been. Ans: T, LO: 6, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: Analytic, AICPA BB: None, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Reporting, IFRS: None 20. When buying receivables wi [Show More]

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