MBA 510 CHAPTER 6 AND 7 EXAM
QUESTIONS AND ANSWERS. VERIFIED
2026.
Outstanding checks - ANS checks that have been written but not yet received by bank for
payment
deposit in transit - ANS a deposit made after bank statement was issued
service charge - ANS bank charge for services rendered
Collections - ANS bank acts as collection agent by accepting payments for its customers
NSF - ANS non-sufficient funds
Errors - ANS can be made by either bank or customer
There two different categories of information - ANS 1. amounts or events we know about
that the bank didn't know about at the time of the statement
2. Amounts or events the bank knows about that we find out about when we receive the bank
statement.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,examples of cash equivalents - ANS treasury bills, Certificates of deposit, and money market
funds
account receivable - ANS are amounts of cash to be received in the future from credit sales to
customers. It is usually collected in cash within 10 to 60 days. They are classified as current
assets and listed on the balance sheet below Cash
Bad Debts expense - ANS When companies sell goods and services on credit, there are
usually some customers who do not pay for the merchandise they purchase; these are referred
to as
Bad debt expense is reported on the ________________ as an___________ - ANS income
statement
operating expense
allowance method - ANS Most large businesses use the ______________________ to
estimate the uncollectible portion of their receivable. This method provides an expense for
uncollectible receivable in advance of their write-off.
Allowance for Doubtful Accounts - ANS is a contra asset account to account receivable on the
balance sheet
The allowance method serves two purposes: - ANS 1. It reduces the value of the receivables
to the amount of cash expected to be realized in the future.
2. The allowance matches the expense of uncollectible accounts with the related revenues of
the period.
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, maker - ANS the person or entity who signs the note and who must make payment on or
before the due date.
Payee - ANS the person or entity to whom payment will be made
Prinicipal - ANS the face amount of the note
maturity date - ANS the date the note becomes dues
interest rate - ANS is the percentage of the principal that the payee annually charges the
maker for the loan
interest - ANS the dollar amount paid by the maker in accordance with this rate
the bank
the depositor - ANS Before placing each item on the bank reconciliation, ask your if it has
been record only by _________, or only by _________
For the allowance method, the write-off entry _______ effect the income - ANS DOES NOT
Interest Rate on note - ANS is normally stated in terms of a year, regardless of the actual
period of time involved.
the seller and the credit buyer - ANS account receivable is an informal agreement between
no formal contract is drawn up and no interest rate is specified on the account unless -
ANS the customer fails to pay within the specified times.
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
QUESTIONS AND ANSWERS. VERIFIED
2026.
Outstanding checks - ANS checks that have been written but not yet received by bank for
payment
deposit in transit - ANS a deposit made after bank statement was issued
service charge - ANS bank charge for services rendered
Collections - ANS bank acts as collection agent by accepting payments for its customers
NSF - ANS non-sufficient funds
Errors - ANS can be made by either bank or customer
There two different categories of information - ANS 1. amounts or events we know about
that the bank didn't know about at the time of the statement
2. Amounts or events the bank knows about that we find out about when we receive the bank
statement.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,examples of cash equivalents - ANS treasury bills, Certificates of deposit, and money market
funds
account receivable - ANS are amounts of cash to be received in the future from credit sales to
customers. It is usually collected in cash within 10 to 60 days. They are classified as current
assets and listed on the balance sheet below Cash
Bad Debts expense - ANS When companies sell goods and services on credit, there are
usually some customers who do not pay for the merchandise they purchase; these are referred
to as
Bad debt expense is reported on the ________________ as an___________ - ANS income
statement
operating expense
allowance method - ANS Most large businesses use the ______________________ to
estimate the uncollectible portion of their receivable. This method provides an expense for
uncollectible receivable in advance of their write-off.
Allowance for Doubtful Accounts - ANS is a contra asset account to account receivable on the
balance sheet
The allowance method serves two purposes: - ANS 1. It reduces the value of the receivables
to the amount of cash expected to be realized in the future.
2. The allowance matches the expense of uncollectible accounts with the related revenues of
the period.
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, maker - ANS the person or entity who signs the note and who must make payment on or
before the due date.
Payee - ANS the person or entity to whom payment will be made
Prinicipal - ANS the face amount of the note
maturity date - ANS the date the note becomes dues
interest rate - ANS is the percentage of the principal that the payee annually charges the
maker for the loan
interest - ANS the dollar amount paid by the maker in accordance with this rate
the bank
the depositor - ANS Before placing each item on the bank reconciliation, ask your if it has
been record only by _________, or only by _________
For the allowance method, the write-off entry _______ effect the income - ANS DOES NOT
Interest Rate on note - ANS is normally stated in terms of a year, regardless of the actual
period of time involved.
the seller and the credit buyer - ANS account receivable is an informal agreement between
no formal contract is drawn up and no interest rate is specified on the account unless -
ANS the customer fails to pay within the specified times.
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
