Receivables - CPA Financial Accounting and Reporting (FAR)
Card 1 of 16
Walnut Company received from a customer an 1-year, $200,000 note bearing annual interest of 8%. After holding the note for 8 months, Walnut discounted the note at a local bank at an effective rate of 12%. What is the maturity value of the note?
Walnut Company received from a customer an 1-year, $200,000 note bearing annual interest of 8%. After holding the note for 8 months, Walnut discounted the note at a local bank at an effective rate of 12%. What is the maturity value of the note?
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The maturity value of the note is the principal of $200K plus the interest due of $16K ($200K x 8%).
The maturity value of the note is the principal of $200K plus the interest due of $16K ($200K x 8%).
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Which of the following situations is most likely to be treated as a sale of accounts receivables?
Which of the following situations is most likely to be treated as a sale of accounts receivables?
Tap to reveal answer
Factoring without recourse means that the original owner of the receivable has no responsibility should the customer never pay. This effectively means the the receivable has been sold.
Factoring without recourse means that the original owner of the receivable has no responsibility should the customer never pay. This effectively means the the receivable has been sold.
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On July 1, Year 10, Cabaret Corporation factored $80,000 of its accounts receivable without recourse to Playtime Company. Playtime retains 10% of the accounts receivable as an allowance for sales returns and charges a 5% commission on the gross amount of factored receivables. How much cash did Cabaret receive from factoring its receivables?
On July 1, Year 10, Cabaret Corporation factored $80,000 of its accounts receivable without recourse to Playtime Company. Playtime retains 10% of the accounts receivable as an allowance for sales returns and charges a 5% commission on the gross amount of factored receivables. How much cash did Cabaret receive from factoring its receivables?
Tap to reveal answer
A total of 15% was held back by Playtime (10% for the allowance and 5% for the commission). Therefore, Cabaret received $80K x 85% (100% - 15%) = $68K.
A total of 15% was held back by Playtime (10% for the allowance and 5% for the commission). Therefore, Cabaret received $80K x 85% (100% - 15%) = $68K.
← Didn't Know|Knew It →
Of the following, which is a method of estimating uncollectible accounts that emphasizes asset valuation rather than income measurement?
Of the following, which is a method of estimating uncollectible accounts that emphasizes asset valuation rather than income measurement?
Tap to reveal answer
Aging receivables focuses on the balance sheet and emphasizes assets. It results in a good matching of revenue and expenses.
Aging receivables focuses on the balance sheet and emphasizes assets. It results in a good matching of revenue and expenses.
← Didn't Know|Knew It →
Walnut Company received from a customer an 1-year, $200,000 note bearing annual interest of 8%. After holding the note for 8 months, Walnut discounted the note at a local bank at an effective rate of 12%. What is the maturity value of the note?
Walnut Company received from a customer an 1-year, $200,000 note bearing annual interest of 8%. After holding the note for 8 months, Walnut discounted the note at a local bank at an effective rate of 12%. What is the maturity value of the note?
Tap to reveal answer
The maturity value of the note is the principal of $200K plus the interest due of $16K ($200K x 8%).
The maturity value of the note is the principal of $200K plus the interest due of $16K ($200K x 8%).
← Didn't Know|Knew It →
Which of the following situations is most likely to be treated as a sale of accounts receivables?
Which of the following situations is most likely to be treated as a sale of accounts receivables?
Tap to reveal answer
Factoring without recourse means that the original owner of the receivable has no responsibility should the customer never pay. This effectively means the the receivable has been sold.
Factoring without recourse means that the original owner of the receivable has no responsibility should the customer never pay. This effectively means the the receivable has been sold.
← Didn't Know|Knew It →
On July 1, Year 10, Cabaret Corporation factored $80,000 of its accounts receivable without recourse to Playtime Company. Playtime retains 10% of the accounts receivable as an allowance for sales returns and charges a 5% commission on the gross amount of factored receivables. How much cash did Cabaret receive from factoring its receivables?
On July 1, Year 10, Cabaret Corporation factored $80,000 of its accounts receivable without recourse to Playtime Company. Playtime retains 10% of the accounts receivable as an allowance for sales returns and charges a 5% commission on the gross amount of factored receivables. How much cash did Cabaret receive from factoring its receivables?
Tap to reveal answer
A total of 15% was held back by Playtime (10% for the allowance and 5% for the commission). Therefore, Cabaret received $80K x 85% (100% - 15%) = $68K.
A total of 15% was held back by Playtime (10% for the allowance and 5% for the commission). Therefore, Cabaret received $80K x 85% (100% - 15%) = $68K.
← Didn't Know|Knew It →
Of the following, which is a method of estimating uncollectible accounts that emphasizes asset valuation rather than income measurement?
Of the following, which is a method of estimating uncollectible accounts that emphasizes asset valuation rather than income measurement?
Tap to reveal answer
Aging receivables focuses on the balance sheet and emphasizes assets. It results in a good matching of revenue and expenses.
Aging receivables focuses on the balance sheet and emphasizes assets. It results in a good matching of revenue and expenses.
← Didn't Know|Knew It →
Walnut Company received from a customer an 1-year, $200,000 note bearing annual interest of 8%. After holding the note for 8 months, Walnut discounted the note at a local bank at an effective rate of 12%. What is the maturity value of the note?
Walnut Company received from a customer an 1-year, $200,000 note bearing annual interest of 8%. After holding the note for 8 months, Walnut discounted the note at a local bank at an effective rate of 12%. What is the maturity value of the note?
Tap to reveal answer
The maturity value of the note is the principal of $200K plus the interest due of $16K ($200K x 8%).
The maturity value of the note is the principal of $200K plus the interest due of $16K ($200K x 8%).
← Didn't Know|Knew It →
Which of the following situations is most likely to be treated as a sale of accounts receivables?
Which of the following situations is most likely to be treated as a sale of accounts receivables?
Tap to reveal answer
Factoring without recourse means that the original owner of the receivable has no responsibility should the customer never pay. This effectively means the the receivable has been sold.
Factoring without recourse means that the original owner of the receivable has no responsibility should the customer never pay. This effectively means the the receivable has been sold.
← Didn't Know|Knew It →
On July 1, Year 10, Cabaret Corporation factored $80,000 of its accounts receivable without recourse to Playtime Company. Playtime retains 10% of the accounts receivable as an allowance for sales returns and charges a 5% commission on the gross amount of factored receivables. How much cash did Cabaret receive from factoring its receivables?
On July 1, Year 10, Cabaret Corporation factored $80,000 of its accounts receivable without recourse to Playtime Company. Playtime retains 10% of the accounts receivable as an allowance for sales returns and charges a 5% commission on the gross amount of factored receivables. How much cash did Cabaret receive from factoring its receivables?
Tap to reveal answer
A total of 15% was held back by Playtime (10% for the allowance and 5% for the commission). Therefore, Cabaret received $80K x 85% (100% - 15%) = $68K.
A total of 15% was held back by Playtime (10% for the allowance and 5% for the commission). Therefore, Cabaret received $80K x 85% (100% - 15%) = $68K.
← Didn't Know|Knew It →
Of the following, which is a method of estimating uncollectible accounts that emphasizes asset valuation rather than income measurement?
Of the following, which is a method of estimating uncollectible accounts that emphasizes asset valuation rather than income measurement?
Tap to reveal answer
Aging receivables focuses on the balance sheet and emphasizes assets. It results in a good matching of revenue and expenses.
Aging receivables focuses on the balance sheet and emphasizes assets. It results in a good matching of revenue and expenses.
← Didn't Know|Knew It →
Walnut Company received from a customer an 1-year, $200,000 note bearing annual interest of 8%. After holding the note for 8 months, Walnut discounted the note at a local bank at an effective rate of 12%. What is the maturity value of the note?
Walnut Company received from a customer an 1-year, $200,000 note bearing annual interest of 8%. After holding the note for 8 months, Walnut discounted the note at a local bank at an effective rate of 12%. What is the maturity value of the note?
Tap to reveal answer
The maturity value of the note is the principal of $200K plus the interest due of $16K ($200K x 8%).
The maturity value of the note is the principal of $200K plus the interest due of $16K ($200K x 8%).
← Didn't Know|Knew It →
Which of the following situations is most likely to be treated as a sale of accounts receivables?
Which of the following situations is most likely to be treated as a sale of accounts receivables?
Tap to reveal answer
Factoring without recourse means that the original owner of the receivable has no responsibility should the customer never pay. This effectively means the the receivable has been sold.
Factoring without recourse means that the original owner of the receivable has no responsibility should the customer never pay. This effectively means the the receivable has been sold.
← Didn't Know|Knew It →
On July 1, Year 10, Cabaret Corporation factored $80,000 of its accounts receivable without recourse to Playtime Company. Playtime retains 10% of the accounts receivable as an allowance for sales returns and charges a 5% commission on the gross amount of factored receivables. How much cash did Cabaret receive from factoring its receivables?
On July 1, Year 10, Cabaret Corporation factored $80,000 of its accounts receivable without recourse to Playtime Company. Playtime retains 10% of the accounts receivable as an allowance for sales returns and charges a 5% commission on the gross amount of factored receivables. How much cash did Cabaret receive from factoring its receivables?
Tap to reveal answer
A total of 15% was held back by Playtime (10% for the allowance and 5% for the commission). Therefore, Cabaret received $80K x 85% (100% - 15%) = $68K.
A total of 15% was held back by Playtime (10% for the allowance and 5% for the commission). Therefore, Cabaret received $80K x 85% (100% - 15%) = $68K.
← Didn't Know|Knew It →
Of the following, which is a method of estimating uncollectible accounts that emphasizes asset valuation rather than income measurement?
Of the following, which is a method of estimating uncollectible accounts that emphasizes asset valuation rather than income measurement?
Tap to reveal answer
Aging receivables focuses on the balance sheet and emphasizes assets. It results in a good matching of revenue and expenses.
Aging receivables focuses on the balance sheet and emphasizes assets. It results in a good matching of revenue and expenses.
← Didn't Know|Knew It →