What are the 2 types of “Quick Assets”? (CT)
- Cash & Cash Equivalents
2. Trade Receivables
What are 4 types of “Cash” and deposit? (CDCB)
- Currency
- Demand deposit
- Checking account (deposit)
- Bank reconciliation
What are the 3 types of “Checking Account (Deposit)”? (DOB)
- Deposit-in-Transit
- Outstanding Check
- Bank Overdrafts
Bank overdrafts occur when a company writes a check for ________ in its _______.
Companies should record bank overdrafts as ________, and add to the amount in ________
More than the amount; Checking account
Current liabilities; Accounts payable
“Bank reconciliation” is a ______ explaining any differences between the bank’s and the company’s _________
Schedule; Records of cash
Reconciliation consists of what 2 sections? (BB)
- Balance per bank statement
2. Balance per book
Cash equivalents are _______, ________ financial instruments that are both:
- Readily ______ to known amounts of cash
- So near their _____that they present ______ changes in _______
Short-term; Highly liquid
- Convertible
- Maturity; Insignificant; Interest rates
(Cash equivalents) Generally, only financial instruments with original maturities of _________ qualify.
90 days or less
(Cash equivalents) What are some examples of “cash equivalents”? (TCM)
- Treasury bill
- Commercial paper
- Money market funds
What are the 2 types of “Restricted Cash”? (CF)
- Compensating balance (minimum balance in savings accounts required by banks)
- Funds (cash set aside for particular purpose, such as dividend fund)
What are the 3 types of “Cash & Cash Equivalents”? (CD-CR)
- Cash & Deposit
- Cash Equivalents
- Restricted Cash
Companies may sub-classify ______ into ______ receivable and ______ receivable.
Trade receivables; Accounts; Notes
What are the 2 methods to record “Bad Debt Expenses”? (DA)
- Direct Write-off Method
2. Allowance Method
(Bad Debt Expenses) Under “Direct Write-Off Method,” when a company determines a particular account to be _____, it charges the loss to ________ (NON-GAAP).
Uncollectible; Bad debt expense a/c
(Bad Debt Expenses) Under “Allowance Method,” what are the 2 types of approaches? (BI)
- Balance sheet approach
2. Income sheet approach
(Allowance Method) the “Balance Sheet Approach” estimates uncollectible accounts at the ________.
To estimate uncollectible accounts, companies may set up an ______ of accounts receivable.
End of each period; Aging schedule
(Bad Debt Expenses) “Income statement approach” is also known as ________
Percentage-of-sales approach
What are the 3 factors of “Receivables Financing”? (PAF)
- Pledge
- Assignment
- Factoring (transfer of receivables)
(Receivables Financing) What are the 2 methods for “Factoring (transfer of receivables”? (WR)
- Without recourse - Transfer is final and the factor assumes the risk of any losses on collections
- With recourse - Factor has an option to re-sell any uncollectible receivable back to the transferor
(Receivables Financing) What are the 3 exceptions (___________) to factoring (transfer of receivables)? (ICP)
(Surrender of control);
- Assets have been ISOLATED from the transferor
- Transferor does not maintain CONTROL over transferred assets
- Transferee has the right to PLEDGE or exchange the assets
(Bank Reconciliation) What two accounts go under “Bank Balance”? (DO(
- Deposit in Transit (+)
2. Outstanding Check (-)
(Bank Reconciliation) What 4 accounts go under “Book Balance”? (BANA)
- Bank Collection (+)
Accrued Interest Revenue - NSF (Non-Sufficient Fund) Check (-)
Accrued Bank Charges
(Restricted Cash) What are some examples of “Funds”? (DPR)
- Dividend fund
- Plant expansion fund
- Retirement of long-term debt fund
In a Balance Sheet, R/E is reported as either _____ or _______
- Reserves for… (MERE declaration)
2. Unappropriated R/E
