ACCOUNTING WHAT THE NUMBERS MEAN
UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS COMPLETE STUDY
GUIDE FULL SOLUTION
●● Allowance for Uncollectible Accounts (or Allowance for Bad Debts)
Answer: The valuation allowance that results in accounts receivable
being reduced by the amount not expected to be collected.
●● bad debts expense (or uncollectible accounts expense)
Answer: An estimated expense, recognized in the fiscal period of the
sale, representing accounts receivable that are not expected to be
collected.
●● bank reconciliation
Answer: The process of bringing into agreement the balance in the Cash
account in the entity's ledger and the balance reported by the bank on the
bank statement.
●● bank service charge
Answer: The fee charged by a bank for maintaining the entity's checking
account.
, ●● carrying value
Answer: The balance of the ledger account (including related contra
accounts, if any) of an asset, liability, or owners' equity account.
Sometimes referred to as book value.
●● cash
Answer: A company's most liquid asset: includes money in change
funds, petty cash, undeposited receipts such as currency, checks, bank
drafts, and money orders, and funds immediately available in bank
accounts.
●● cash discount
Answer: a discount offered for prompt payment.
●● cash equivalents
Answer: Short-term, highly liquid investment that can be readily
converted into cash with a minimal risk of price change due to interest
rate movements; examples include US Treasury securities, bank CD's,
money market funds, and commercial paper.
●● collateral
Answer: Assets of a borrower that can be used to satisfy the obligation if
payment is not made when due.
UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS COMPLETE STUDY
GUIDE FULL SOLUTION
●● Allowance for Uncollectible Accounts (or Allowance for Bad Debts)
Answer: The valuation allowance that results in accounts receivable
being reduced by the amount not expected to be collected.
●● bad debts expense (or uncollectible accounts expense)
Answer: An estimated expense, recognized in the fiscal period of the
sale, representing accounts receivable that are not expected to be
collected.
●● bank reconciliation
Answer: The process of bringing into agreement the balance in the Cash
account in the entity's ledger and the balance reported by the bank on the
bank statement.
●● bank service charge
Answer: The fee charged by a bank for maintaining the entity's checking
account.
, ●● carrying value
Answer: The balance of the ledger account (including related contra
accounts, if any) of an asset, liability, or owners' equity account.
Sometimes referred to as book value.
●● cash
Answer: A company's most liquid asset: includes money in change
funds, petty cash, undeposited receipts such as currency, checks, bank
drafts, and money orders, and funds immediately available in bank
accounts.
●● cash discount
Answer: a discount offered for prompt payment.
●● cash equivalents
Answer: Short-term, highly liquid investment that can be readily
converted into cash with a minimal risk of price change due to interest
rate movements; examples include US Treasury securities, bank CD's,
money market funds, and commercial paper.
●● collateral
Answer: Assets of a borrower that can be used to satisfy the obligation if
payment is not made when due.
