ACING MBA 510 CHAPTER 6 AND 7 WITH THE LATEST A+ QUESTIONS AND ANSWERS STUDY COMPANION.

ACING MBA 510 CHAPTER 6 AND 7 WITH THE LATEST A+ QUESTIONS AND ANSWERS STUDY COMPANION. outstanding checks checks that have been written but not yet received by bank for payment deposit in transit a deposit made after bank statement was issued service charge bank charge for services rendered Collections bank acts as collection agent by accepting payments for its customers NSF non-sufficient funds Errors can be made by either bank or customer There two different categories of information 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. examples of cash equivalents treasury bills, Certificates of deposit, and money market funds account receivable 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 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___________ income statement operating expense allowance method 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 is a contra asset account to account receivable on the balance sheet The allowance method serves two purposes: 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. maker the person or entity who signs the note and who must make payment on or before the due date. Payee the person or entity to whom payment will be made Prinicipal the face amount of the note maturity date the date the note becomes dues interest rate is the percentage of the principal that the payee annually charges the maker for the loan interest the dollar amount paid by the maker in accordance with this rate the bank the depositor 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 DOES NOT Interest Rate on note is normally stated in terms of a year, regardless of the actual period of time involved. the seller and the credit buyer account receivable is an informal agreement between no formal contract is drawn up and no interest rate is specified on the account unless the customer fails to pay within the specified times. notes Sometimes customers sign formal contacts called _______, when they buy merchandise or services on credit. interest-bearing notes Even more often, Customers from whom account receivable are past due sign_______________________________t o receive additional time to make payment current asset long-term asset Depending on the length of time until the due date, the note may b e classified as a _______________ or ______________ principal x interest rate x time Whats the formula for computing the interest on a note? service charge, or rent, for the use of money Interest can be thought of as the 360 265 in computing interest for a period of less than one year when the3 due date of the note is stated in days, the denominator in the Time function is stated as _____ instead of ___ dishonored note receivable If the maker of a note fails to pay the note on the due date loss Allowance for Bad Debts