1) Short-term investments:
A) are equity securities
B) are debt securities
C) may be classified as either debt or equity securities
D) represents Accounts Receivable and notes receivable on the balance sheet
2) Short-term investments are also called:
A) temporary investments
B) marketable securities
C) temporary investments or marketable securities
D) notes receivable
3) The purchase of short-term investments:
A) increases assets
B) increases liabilities
C) increases equity
D) has no effect on assets
4) Corporations invest in a short-term investment:
A) to park cash temporarily
B) to sell it for more than its cost
C) to generate a higher profile
D) to park cash temporarily and to increase income
5) Unrealized gains or losses on short-term investments are reported using:
A) A liability account
B) A revenue account
C) An expense account
D) The other comprehensive income account
6) A ledger that contains a separate account for each customer is called an accounts receivable:
A) control ledger
B) current ledger
C) trade ledger
D) subsidiary ledger
7) A critical element of internal control over collections of accounts receivables is:
A) depositing the cash from the cash register on a daily basis
B) setting up a petty cash account
C) using a cheque writing machine
D) the separation of cash-handling and cash-accounting duties
8) One method of establishing proper internal control over collections of accounts receivable is to:
A) make all disbursements by cheque
B) set up a petty cash fund
C) establish a bank lock-box
D) designate an authorized cheque signer
9) Under a lock-box system, customers' payments are initially received by the company's:
A) accounts receivable department
B) treasurer's department
C) purchasing department
D) bank
10) The Uncollectible Account Expense account is classified:
A) as a contra-asset account
B) as part of cost of goods sold
C) as the cost to the seller of extending credit
D) deducted from Accounts Receivable account on the balance sheet