Test Bank for Intermediate Accounting, Twelfth Edition
26.Bank overdrafts, if material, should bea.reported as a deduction from the current asset section.b.reported as a deduction from cash.c.netted against cash and a net cash amount reported.d.reported as a current liability.27.Deposits held as compensating balancesa.usually do not earn interest.b.if legally restricted and held against short-term credit may be included as cash.c.if legally restricted and held against long-term credit may be included among currentassets.d.none of these.28.The category "trade receivables" includesa.advances to officers and employees.b.income tax refunds receivable.c.claims against insurance companies for casualties sustained.d.none of these.29.Which of the following should be recorded in Accounts Receivable?a.Receivables from officersb.Receivables from subsidiariesc.Dividends receivabled.None of these
30.What is the preferable presentation of accounts receivable from officers, employees, or affiliated companies on a balance sheet?a.As offsets to capital.b.By means of footnotes only.c.As assets but separately from other receivables.d.As trade notes and accounts receivable if they otherwise qualify as current assets.
31.When a customer purchases merchandise inventory from a business organization, shemay be given a discount which is designed to induce prompt payment. Such a discount iscalled a(n)a.trade discount.b.nominal discount.c.enhancement discount.d.cash discount.
32.Trade discounts area.not recorded in the accounts; rather they are a means of computing a price.b.used to avoid frequent changes in catalogues.c.used to quote different prices for different quantities purchased.d.all of the above.33.If a company employs the gross method of recording accounts receivable from customers,then sales discounts taken should be reported asa.a deduction from sales in the income statement.b.an item of "other expense" in the income statement.c.a deduction from accounts receivable in determining the net realizable value of accounts receivable.
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