ACC 301 Exam 1 questions and answers
graded A+
most liquid asset - correct answer ✔✔cash
cash is the standard... - correct answer ✔✔medium of exchange
cash is the basis for... - correct answer ✔✔measuring and accounting for all items
current assets - correct answer ✔✔assets that are expected to be converted to cash (sold, used) within a
year
cash equivalents - correct answer ✔✔short-term, highly liquid investments that are both...
-readily convertible to cash
-so near their maturity that they present insignificant risk of changes in value
examples of cash equivalents - correct answer ✔✔treasury bills, commercial paper, money market funds
restricted cash - correct answer ✔✔cash that is not available for general use but instead is restricted for
a particular purpose
-segregated from "regular" cash
examples of restricted cash - correct answer ✔✔plant expansion, retirement of long-term debt,
compensating balances
bank overdraft - correct answer ✔✔a company writes a check for more than the amount in its cash
account
bank overdraft is reported as... - correct answer ✔✔current liability
, bank overdrafts offset against other cash accounts only when... - correct answer ✔✔accounts are with
the same bank
receivables - correct answer ✔✔claims held against customers and others for money, goods, or services
receivables are classified in the balance sheet as... - correct answer ✔✔-current or noncurrent
-trade or nontrade
examples of receivables - correct answer ✔✔accounts receivable, notes receivable
nontrade receivables - correct answer ✔✔receivables that originate from sources other than customers
(ex. advances to officers and employees, deposits paid to cover potential damages or losses)
revenue recognition principle - correct answer ✔✔indicates that a company should recognize revenue
when it satisfies its performance obligation by transferring the good or service to the customer
transaction price - correct answer ✔✔amount of consideration a company expects to receive from a
customer in exchange for transferring goods or services
variable consideration - correct answer ✔✔price of a good/service is dependent on future events
(examples of these future events: discounts, returns and allowances, rebates, and performance bonuses)
trade discounts - correct answer ✔✔reductions from the list price
trade discounts are not recognized in... - correct answer ✔✔accounting records
sales returns and allowances - correct answer ✔✔contra revenue account to sales revenue
graded A+
most liquid asset - correct answer ✔✔cash
cash is the standard... - correct answer ✔✔medium of exchange
cash is the basis for... - correct answer ✔✔measuring and accounting for all items
current assets - correct answer ✔✔assets that are expected to be converted to cash (sold, used) within a
year
cash equivalents - correct answer ✔✔short-term, highly liquid investments that are both...
-readily convertible to cash
-so near their maturity that they present insignificant risk of changes in value
examples of cash equivalents - correct answer ✔✔treasury bills, commercial paper, money market funds
restricted cash - correct answer ✔✔cash that is not available for general use but instead is restricted for
a particular purpose
-segregated from "regular" cash
examples of restricted cash - correct answer ✔✔plant expansion, retirement of long-term debt,
compensating balances
bank overdraft - correct answer ✔✔a company writes a check for more than the amount in its cash
account
bank overdraft is reported as... - correct answer ✔✔current liability
, bank overdrafts offset against other cash accounts only when... - correct answer ✔✔accounts are with
the same bank
receivables - correct answer ✔✔claims held against customers and others for money, goods, or services
receivables are classified in the balance sheet as... - correct answer ✔✔-current or noncurrent
-trade or nontrade
examples of receivables - correct answer ✔✔accounts receivable, notes receivable
nontrade receivables - correct answer ✔✔receivables that originate from sources other than customers
(ex. advances to officers and employees, deposits paid to cover potential damages or losses)
revenue recognition principle - correct answer ✔✔indicates that a company should recognize revenue
when it satisfies its performance obligation by transferring the good or service to the customer
transaction price - correct answer ✔✔amount of consideration a company expects to receive from a
customer in exchange for transferring goods or services
variable consideration - correct answer ✔✔price of a good/service is dependent on future events
(examples of these future events: discounts, returns and allowances, rebates, and performance bonuses)
trade discounts - correct answer ✔✔reductions from the list price
trade discounts are not recognized in... - correct answer ✔✔accounting records
sales returns and allowances - correct answer ✔✔contra revenue account to sales revenue
