ACG 2021- Exam 3 Questions and All
Correct Answers.
What are three factors that contribute to fraudulent activity? - Answer 1. opportunity
2. financial pressure
3. rationalization
Sarbanes-Oxley Act - Answer -applies to policy trade U.S. corporations
-required to maintain a system of internal control with the help of internal auditors who also
monitor its effectiveness continuously
Accounts receivable are reported in the current assets section of the balance sheet at: - Answer
net realizable value
Which statement is true about reporting receivables on the balance sheet? - Answer
allowance for doubtful accounts is shown as a DEDUCTION from accounts receivable on the
balance sheet
Which of these statements about national credit card is incorrect? - Answer the retailer
receives more cash when customers use national credit cards than when customers pay with
cash instead of credit cards
What type of receivable is evidenced by a formal instrument and normally requires the payment
of interest? - Answer a note receivable
Which one of the following is not one of the principles of managing accounts receivable? -
Answer determining from which vendor credit should be requested
When is a receivable recorded by a service organization? - Answer when service is provided
on account
On the date a 90-day note is honored, how much cash will the payee receive? - Answer face
value plus 90-days of interest
Which one of following is not one of the five basic issues in accounting for notes receivable? -
Answer filling notes receivable
, When a note receivable is paid on time and no interest has been previously accrued, what will
the journal entry to record the transaction contain? - Answer two credits and one debit
Which of the following is a threat of non-payment from a single customer or class of customers
that could adversely affect the financial health of a company? - Answer a concentration of
credit risk
Interest Formula - Answer Interest= principal x rate x time
At what value are accounts receivable reported on the balance sheet? - Answer net
realizable value
Which one of the following is part of the transaction that is recorded when an account is written
off under the allowance method? - Answer allowance for doubtful accounts is debited
Which one of these statements about promissory notes is correct? - Answer notes receivable
are formal agreements
Factoring is the process of: - Answer selling accounts receivable at a discount to another
party
When an uncollectible account is recovered after is has been written off, which of the following
journal entries will be recorded first? - Answer debit accounts receivable and credit
allowance for doubtful accounts
Maturity Value Formula - Answer maturity value= principal x interest
Inventory Turnover Ratio Formula - Answer inventory turnover ratio= cost of goods
sold/average inventory
Days in Inventory Formula - Answer 365/inventory turnover ratio
What accounting concept is employed when using the lower-of-cost-or-market valuation? -
Answer conservatism
If the ending inventory is overstated, what occurs? - Answer Assets are overstated and
stockholders' equity is overstated
Correct Answers.
What are three factors that contribute to fraudulent activity? - Answer 1. opportunity
2. financial pressure
3. rationalization
Sarbanes-Oxley Act - Answer -applies to policy trade U.S. corporations
-required to maintain a system of internal control with the help of internal auditors who also
monitor its effectiveness continuously
Accounts receivable are reported in the current assets section of the balance sheet at: - Answer
net realizable value
Which statement is true about reporting receivables on the balance sheet? - Answer
allowance for doubtful accounts is shown as a DEDUCTION from accounts receivable on the
balance sheet
Which of these statements about national credit card is incorrect? - Answer the retailer
receives more cash when customers use national credit cards than when customers pay with
cash instead of credit cards
What type of receivable is evidenced by a formal instrument and normally requires the payment
of interest? - Answer a note receivable
Which one of the following is not one of the principles of managing accounts receivable? -
Answer determining from which vendor credit should be requested
When is a receivable recorded by a service organization? - Answer when service is provided
on account
On the date a 90-day note is honored, how much cash will the payee receive? - Answer face
value plus 90-days of interest
Which one of following is not one of the five basic issues in accounting for notes receivable? -
Answer filling notes receivable
, When a note receivable is paid on time and no interest has been previously accrued, what will
the journal entry to record the transaction contain? - Answer two credits and one debit
Which of the following is a threat of non-payment from a single customer or class of customers
that could adversely affect the financial health of a company? - Answer a concentration of
credit risk
Interest Formula - Answer Interest= principal x rate x time
At what value are accounts receivable reported on the balance sheet? - Answer net
realizable value
Which one of the following is part of the transaction that is recorded when an account is written
off under the allowance method? - Answer allowance for doubtful accounts is debited
Which one of these statements about promissory notes is correct? - Answer notes receivable
are formal agreements
Factoring is the process of: - Answer selling accounts receivable at a discount to another
party
When an uncollectible account is recovered after is has been written off, which of the following
journal entries will be recorded first? - Answer debit accounts receivable and credit
allowance for doubtful accounts
Maturity Value Formula - Answer maturity value= principal x interest
Inventory Turnover Ratio Formula - Answer inventory turnover ratio= cost of goods
sold/average inventory
Days in Inventory Formula - Answer 365/inventory turnover ratio
What accounting concept is employed when using the lower-of-cost-or-market valuation? -
Answer conservatism
If the ending inventory is overstated, what occurs? - Answer Assets are overstated and
stockholders' equity is overstated
