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Bank reconciliation is necessary to agree cash balance according to the bank with per depositor.
True
Time deposit accounts have no restrictions on withdrawal.
False
Cash receipts in a business using a bank account are initially deposited in a cash register.
False
Errors by both parties do not contribute to disagreements between balance per bank and balance per books.
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Bank reconciliation lists the items that cause the cash balance in the bank statement to match exactly with the balance in the depositor's ledger.
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The business usually uses cash for all payments except for very large amounts.
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Companies use trade discounts to reveal the true invoice price to competitors.
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ABC company sold its product at birr 45 per unit with a trade discount of 10% applied.
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Cash discounts are offered by companies to delay payment from customers.
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Sales discounts are recorded as an addition to sales revenue on the income statement.
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Under the net method, companies record sales at the gross amount without deducting cash discounts.
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Ideally, companies should measure receivables in terms of their future value rather than their present value.
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Derecognition of receivables occurs when a company transfers a receivable to another company, thereby transferring the risks and rewards of ownership to the other company.
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Assessing whether all the risks and rewards of ownership are transferred when a company sells a receivable is always a straightforward process.
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Reporting of trade and non-trade receivables should be combined in financial statements.
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Disclosure requirements related to receivables include providing information about collectible receivables only.
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Transfers of receivables do not raise any significant issues as they are straightforward transactions.
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According to Solution A, the Cash amount recorded for the receipt of the note is $9,520.
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In Solution B, the Interest Revenue recognized at the end of Year 1 is $1,142.
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The Discount Amortization Schedule in Solution B shows that at the end of Year 1, the Carrying Amount of the Note Receivable is $9,662.
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According to the solution provided, the derecognition of receivables occurs when the contractual rights to the cash flows of the receivable no longer exist.
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The market rate of interest for a note of similar risk in this scenario is 10 percent.
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If a company collects its receivable when due, it must recognize those receivables in its books.
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When the stated rate matches the market rate, the present value of a note will always differ from the face value.
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If a company receives a zero-interest-bearing note, its present value will be equal to the cash paid to the issuer.
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Kurat Co. issued a three-year note to Mayet Imports at a 5% annual interest rate.
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Discount or premium over the life of a note is never amortized by companies when recording notes at present value.
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The implicit interest rate can be calculated when a company receives a zero-interest-bearing note.
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If the market rate for a note is higher than its stated rate, companies will record a premium over the life of the note.
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