Financial Terms and Calculations Quiz
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Questions and Answers

What is the formula for calculating Maturity Value?

  • Principal + Interest (correct)
  • Maturity Value x Discount Rate
  • Principal + Discount
  • Principal x Rate x Time x 360

    • Discount is calculated by multiplying Maturity Value with the Discount Rate.

    True (A)

    What is the formula to compute Interest?

    I = PxRxT

    Net Proceeds are calculated by subtracting __________ from Maturity Value.

    <p>Discount</p> Signup and view all the answers

    Match the financial terms with their definitions:

    <p>Principal = The face value of the note or borrowed amount Interest = Rental for the use of borrowed money Discounting Notes = Transferring a note with recourse to a bank Carrying Amount = Principal plus accrued interest</p> Signup and view all the answers

    Which of the following best describes 'Gain or Loss on note receivable discounting'?

    <p>The difference between net proceeds and carrying amount (C)</p> Signup and view all the answers

    The Time in financial terms refers to the period up to the maturity date.

    <p>True (A)</p> Signup and view all the answers

    What does the term 'Interest Expense' signify?

    <p>The interest a debtor must pay to the creditor.</p> Signup and view all the answers

    What account is needed to adjust the beginning Inventory to the Income Summary account?

    <p>Inventory Beg (B)</p> Signup and view all the answers

    Net Sales is calculated by subtracting discounts from total sales.

    <p>True (A)</p> Signup and view all the answers

    What is the purpose of setting up Ending Inventory?

    <p>To determine the amount of inventory on hand at the end of the period.</p> Signup and view all the answers

    What is the total sales after calculating $35,700 - 15,000$?

    <p>P20,700 (D)</p> Signup and view all the answers

    Promissory notes can only be interest-bearing.

    <p>False (B)</p> Signup and view all the answers

    The total goods available for sale is the sum of __________ and Ending Inventory.

    <p>Net Purchases</p> Signup and view all the answers

    Match the expenses with their respective descriptions:

    <p>Salaries = Employee compensation payment Freight Out = Shipping costs for sold goods Advertising = Promotional expenses Store Supplies = Items used for store operations</p> Signup and view all the answers

    What is the primary purpose of the aging of accounts receivable?

    <p>To estimate uncollectible accounts.</p> Signup and view all the answers

    The ______________ is the individual or entity who receives payment upon the due date of a promissory note.

    <p>Payee</p> Signup and view all the answers

    Which of the following activities has not been previously recorded?

    <p>Cost of Goods Sold (B)</p> Signup and view all the answers

    A voucher must be prepared after every transaction that involves payment.

    <p>False (B)</p> Signup and view all the answers

    Match the aging period of accounts receivable with its respective allowance for uncollectible accounts:

    <p>1-30 days = 2% 31-60 days = 3% 61-90 days = 5% 91-120 days = 10%</p> Signup and view all the answers

    What is the main purpose of procedures in the voucher system?

    <p>To ensure internal control over cash disbursements.</p> Signup and view all the answers

    What type of transaction could result in a promissory note?

    <p>Loans involving a bank (D)</p> Signup and view all the answers

    The maker of a promissory note is considered the lender.

    <p>False (B)</p> Signup and view all the answers

    What is classified as current or not due and past due or overdue?

    <p>Accounts Receivable</p> Signup and view all the answers

    What is a voucher primarily used for?

    <p>To document authority to pay cash (B)</p> Signup and view all the answers

    A check must be recorded in the voucher register.

    <p>False (B)</p> Signup and view all the answers

    What must be done before the preparations of vouchers?

    <p>Verification of supporting documents.</p> Signup and view all the answers

    A _____ is a record that contains chronological and serial records of all checks issued.

    <p>check register</p> Signup and view all the answers

    Match the following terms with their definitions:

    <p>Drawee = The bank on which the check is drawn Payee = The one whose order the check is drawn Check Register = A special journal containing records of all checks issued Voucher = A document that authorizes the payment of cash</p> Signup and view all the answers

    Which of the following is NOT a step that must be done prior to the preparation of vouchers?

    <p>Approval from the accounting department (A)</p> Signup and view all the answers

    What does maturity value refer to?

    <p>Principal plus interest earned (A)</p> Signup and view all the answers

    A credit note is considered as a non-interest bearing note.

    <p>True (A)</p> Signup and view all the answers

    A voucher can be issued or paid at a later date depending on credit terms.

    <p>True (A)</p> Signup and view all the answers

    What is indicated by depreciation expense in the financial statements?

    <p>A reduction in the value of fixed assets over time.</p> Signup and view all the answers

    What does 'proceeds' refer to in the context of notes?

    <p>The amount received by the endorser from the endorsee.</p> Signup and view all the answers

    The __________ is the date when the note becomes due for payment.

    <p>maturity date</p> Signup and view all the answers

    Which of the following represents the calculation for discount?

    <p>D = MV x DR x DP (B)</p> Signup and view all the answers

    In a periodic inventory system, ending inventory can only be determined by a physical count.

    <p>True (A)</p> Signup and view all the answers

    What is the term used for the life of a note?

    <p>Term of the note</p> Signup and view all the answers

    Which of the following is considered a component of factory overhead?

    <p>Indirect labor (C)</p> Signup and view all the answers

    Vouchers Payable is used instead of Accounts Payable under the voucher system.

    <p>True (A)</p> Signup and view all the answers

    What are prime costs in manufacturing?

    <p>Direct materials and direct labor</p> Signup and view all the answers

    Factory overhead is known as __________ or factory burden.

    <p>manufacturing overhead</p> Signup and view all the answers

    What is a voucher register used for?

    <p>To record vouchers (C)</p> Signup and view all the answers

    Allocated costs are costs that can be easily traced to specific products.

    <p>False (B)</p> Signup and view all the answers

    What are two components of prime costs?

    <p>Direct materials and direct labor</p> Signup and view all the answers

    What is the primary function of a special journal?

    <p>Records only one kind of transaction (D)</p> Signup and view all the answers

    Using special journals can help to reduce recording time.

    <p>True (A)</p> Signup and view all the answers

    What is one disadvantage of not using special journals?

    <p>Only one person can use the books at a time.</p> Signup and view all the answers

    The general journal is used to record transactions that could not be recorded in the special journals, such as __________.

    <p>adjusting entries</p> Signup and view all the answers

    Match the types of journals with their corresponding transactions:

    <p>Sales Journal = Sales on account Purchase Journal = Purchases on account Cash Receipts Journal = Cash sales General Journal = Adjusting entries</p> Signup and view all the answers

    Which of the following is NOT a common feature of special journals?

    <p>Chronological recording of all transactions (A)</p> Signup and view all the answers

    More economical operation is an advantage of using special journals.

    <p>True (A)</p> Signup and view all the answers

    What is one benefit of easy tracing of transactions in special journals?

    <p>Faster and easier retrieval of transaction information.</p> Signup and view all the answers

    What does 'discounting of notes without recourse' allow the holder of a note to do?

    <p>Transfer the note to the bank for immediate cash (C)</p> Signup and view all the answers

    A dishonored note means the maker paid it at the due date.

    <p>False (B)</p> Signup and view all the answers

    What is the maturity date for a note that states, 'One year after date, I promise to pay'?

    <p>Same day and month of the following year</p> Signup and view all the answers

    The net realizable value for accounts is $__________.

    <p>1,150,000</p> Signup and view all the answers

    Match the following terms with their descriptions related to notes:

    <p>Honored = Maker pays at the due date Dishonored = Maker fails to pay the due date On Demand = Maturity date dependent on payee's will Maturity Date = Date when the note becomes due</p> Signup and view all the answers

    Which of the following correctly describes the 'maturity date' of a note?

    <p>It is stated directly on the note (B)</p> Signup and view all the answers

    The total period for a note can be determined without counting days.

    <p>False (B)</p> Signup and view all the answers

    What happens to the maturity value when the note is discounted?

    <p>It is reduced by the computed discount.</p> Signup and view all the answers

    What is a promissory note?

    <p>A written unconditional promise to pay a sum of money (B)</p> Signup and view all the answers

    Notes Receivable and Notes Payable are the same.

    <p>False (B)</p> Signup and view all the answers

    What is the allowance for uncollectible accounts for the aging category of 91-120 days overdue if there is a balance of $100,000?

    <p>$10,000</p> Signup and view all the answers

    The __________ is known as the borrower or debtor in a promissory note.

    <p>maker</p> Signup and view all the answers

    Match the aging categories of accounts receivable with their respective allowance rates:

    <p>1-30 days = 2% 31-60 days = 3% 61-90 days = 5% 91-120 days = 10%</p> Signup and view all the answers

    Which transaction typically leads to the creation of a promissory note?

    <p>Loans involving banks or lending institutions (D)</p> Signup and view all the answers

    A notes payable can be both interest-bearing and non-interest bearing.

    <p>True (A)</p> Signup and view all the answers

    What is the first step in adjusting beginning inventory?

    <p>Close to Income Summary account (B)</p> Signup and view all the answers

    What term describes the individual or entity who receives payment upon the due date of a promissory note?

    <p>payee</p> Signup and view all the answers

    Ending inventory must be set up before preparing cost of goods sold.

    <p>True (A)</p> Signup and view all the answers

    What needs to occur with activities that have not been previously recorded?

    <p>Record accrued expenses for cost of goods sold.</p> Signup and view all the answers

    In a merchandising concern, net purchases are calculated as gross purchases minus __________.

    <p>purchase returns and allowances</p> Signup and view all the answers

    Match the following accounts with their descriptions:

    <p>Inventory = Assets held for sale Income Summary = Temporary account for closing Purchases = Costs incurred to buy goods Freight Out = Shipping costs for sold goods</p> Signup and view all the answers

    What is included in net sales calculation?

    <p>Total sales minus discounts (D)</p> Signup and view all the answers

    What record is used for tracking checks issued?

    <p>Voucher register</p> Signup and view all the answers

    What does the term 'Carrying Amount' refer to?

    <p>The sum of the principal and interest (B)</p> Signup and view all the answers

    The discount period is calculated by subtracting the maturity date from the date of discounting.

    <p>True (A)</p> Signup and view all the answers

    What is the formula for calculating net proceeds from a note discounting?

    <p>Net Proceeds = Maturity Value - Discount</p> Signup and view all the answers

    The principal is defined as the __________ of the note or the amount borrowed.

    <p>face value</p> Signup and view all the answers

    Which of the following statements about interest is correct?

    <p>Interest is charged over the time period on the principal (B)</p> Signup and view all the answers

    The gain or loss on note receivable discounting is calculated as the difference between net proceeds and the carrying amount.

    <p>True (A)</p> Signup and view all the answers

    Explain the term 'Discounting Notes'.

    <p>Discounting Notes refers to the process of transferring a note with recourse to a bank before its maturity date.</p> Signup and view all the answers

    What does a voucher primarily serve as?

    <p>Evidence of authority to pay cash (A)</p> Signup and view all the answers

    Checks must be issued before a voucher can be prepared.

    <p>False (B)</p> Signup and view all the answers

    What must be verified before the preparation of vouchers?

    <p>Supporting documents</p> Signup and view all the answers

    The __________ is the individual on whose order the check is drawn.

    <p>payee</p> Signup and view all the answers

    Which of the following best describes the voucher system?

    <p>A system for payment verification and recording (D)</p> Signup and view all the answers

    A check must be recorded in the check register after payment.

    <p>True (A)</p> Signup and view all the answers

    What document serves as evidence for the authority to pay cash?

    <p>Voucher</p> Signup and view all the answers

    Which factor is NOT a cause of uncollectibility of accounts?

    <p>Timely payments by the debtor (D)</p> Signup and view all the answers

    What is the primary purpose of adjusting the beginning inventory account to the Income Summary account?

    <p>To reflect accurate financial performance (D)</p> Signup and view all the answers

    The allowance for bad debts is considered in the computation of total receivables.

    <p>False (B)</p> Signup and view all the answers

    What is the uncollectible rate estimated for Apple Company based on past experiences?

    <p>1%</p> Signup and view all the answers

    Net purchases include only the cost of goods purchased without considering allowances.

    <p>False (B)</p> Signup and view all the answers

    The __________ method is used for allocating doubtful accounts by multiplying receivables with the experience rate.

    <p>Percentage of Accounts Receivable</p> Signup and view all the answers

    What must be prepared first for every transaction that involves payment in a voucher system?

    <p>A voucher</p> Signup and view all the answers

    Match the terms with their definitions related to bad debts:

    <p>Bad Debts Expense = The cost of uncollectible accounts Allowance for Doubtful Accounts = Contra asset account for receivables Percentage of Net Credit Sales = Method for estimating bad debts based on sales Uncollectible Accounts = Receivables that are expected to be uncollectible</p> Signup and view all the answers

    What percentage of accounts receivable represents uncollectible accounts when total sales are P3,000,000?

    <p>P30,000 (A)</p> Signup and view all the answers

    Interest receivables are included when preparing a purchases journal.

    <p>True (A)</p> Signup and view all the answers

    Which account is credited when closing the beginning inventory account?

    <p>Income Summary Account (D)</p> Signup and view all the answers

    What account is affected when recognizing an estimated uncollectible account?

    <p>Allowance for Doubtful Accounts</p> Signup and view all the answers

    Accrued expenses are included in the calculation of cost of goods sold.

    <p>True (A)</p> Signup and view all the answers

    Name one of the components that must be included in the total goods available for sale.

    <p>Beginning Inventory</p> Signup and view all the answers

    Which components are considered Prime Costs?

    <p>Direct Materials and Direct Labor (C)</p> Signup and view all the answers

    Factory Overhead includes direct labor costs.

    <p>False (B)</p> Signup and view all the answers

    What is the role of a voucher register?

    <p>To record vouchers in a chronological order similar to a purchase journal.</p> Signup and view all the answers

    Direct materials are all materials that form an integral part of the finished _____.

    <p>goods</p> Signup and view all the answers

    Match the following elements of manufacturing costs with their definitions:

    <p>Direct Materials = Cost of raw materials integral to the product Direct Labor = Wages of workers directly involved in product creation Factory Overhead = Indirect costs associated with manufacturing Allocated Costs = Costs that cannot be specifically traced to a product</p> Signup and view all the answers

    What costs fall under Conversion Costs?

    <p>Direct Labor and Factory Overhead (D)</p> Signup and view all the answers

    A check is defined as a written order signed by the bank to pay a specified sum of money.

    <p>False (B)</p> Signup and view all the answers

    Name one example of an indirect material used in production.

    <p>Glue used in furniture making.</p> Signup and view all the answers

    What is the term for the amount due at the maturity date of a promissory note?

    <p>Maturity Value (D)</p> Signup and view all the answers

    The discount on a note is calculated by multiplying the maturity value with the discount rate.

    <p>True (A)</p> Signup and view all the answers

    What does 'interest income' refer to?

    <p>The interest that a creditor is entitled to receive from the debtor.</p> Signup and view all the answers

    The process of calculating the amount received by the endorser from the endorsee is known as __________.

    <p>proceeds</p> Signup and view all the answers

    Which of the following is true regarding a non-interest bearing note?

    <p>Its maturity value equals the face amount. (D)</p> Signup and view all the answers

    Accrued income allows the inventory to be determined without a physical count.

    <p>False (B)</p> Signup and view all the answers

    What does the term 'discount period' refer to?

    <p>The number of days from the date of discounting up to the maturity date of the note.</p> Signup and view all the answers

    What is the consequence when the maker of a promissory note fails to pay at the maturity date?

    <p>The note is considered dishonored. (B)</p> Signup and view all the answers

    A maturity date can always be clearly determined for a note that states 'on demand'.

    <p>False (B)</p> Signup and view all the answers

    What must be done to determine the maturity date stated on a promissory note?

    <p>Count the exact number of days from the date of the promise to pay.</p> Signup and view all the answers

    A note that is paid at the due date is referred to as __________.

    <p>honored</p> Signup and view all the answers

    How is the discount computed when a holder transfers the note to the bank?

    <p>By multiplying the maturity value with the discount rate. (C)</p> Signup and view all the answers

    Match the following types of notes with their characteristics:

    <p>Honored Note = Paid at maturity date Dishonored Note = Not paid at maturity date On Demand Note = Dependant on payee's will Stated Date Note = Has a specific maturity date</p> Signup and view all the answers

    Discounting of notes without recourse allows the holder to retain the note for future cash flow.

    <p>False (B)</p> Signup and view all the answers

    What is the allowance for bad debts amount presented in the content?

    <p>-39,500</p> Signup and view all the answers

    What does the term 'Carrying Amount' refer to in the context of notes?

    <p>Principal plus the interest calculated over time (A)</p> Signup and view all the answers

    The discount rate is applied to the Maturity Value in the calculation of the discount.

    <p>True (A)</p> Signup and view all the answers

    What is the formula to calculate the Net Proceeds from discounting a note?

    <p>Net Proceeds = Maturity Value - Discount</p> Signup and view all the answers

    The difference between the net proceeds from discounting of the note and the __________ of the note receivable is referred to as gain or loss.

    <p>carrying amount</p> Signup and view all the answers

    Which of the following best describes the term 'Discount Period'?

    <p>The duration from discounting date to maturity date (A)</p> Signup and view all the answers

    Interest is calculated by multiplying the principal amount by the interest rate and the time period.

    <p>True (A)</p> Signup and view all the answers

    What is the purpose of discounting notes?

    <p>To transfer a note with recourse to a bank for immediate cash.</p> Signup and view all the answers

    What is the main purpose of the Cash Receipts Journal?

    <p>To record all cash collections (D)</p> Signup and view all the answers

    Official Receipts are issued every time cash is received by a business.

    <p>True (A)</p> Signup and view all the answers

    What type of receivables are considered Trade Receivables?

    <p>Receivables from the sale of goods and services in the ordinary course of business.</p> Signup and view all the answers

    The __________ Journal records all cash disbursements.

    <p>Cash Payments</p> Signup and view all the answers

    Match the following types of journals with their purpose:

    <p>Sales Journal = Records sales on account Cash Receipts Journal = Records all cash collections Cash Payments Journal = Records all cash disbursements General Journal = Records transactions that cannot be entered in special journals</p> Signup and view all the answers

    What is an example of a transaction that cannot be recorded in special journals?

    <p>Sales returns (A)</p> Signup and view all the answers

    Accounts Receivables are supported by promissory notes.

    <p>False (B)</p> Signup and view all the answers

    What is the function of the General Journal?

    <p>To record transactions that cannot be entered in any special journals.</p> Signup and view all the answers

    What is the primary document used for cash payment?

    <p>Cash Voucher (A)</p> Signup and view all the answers

    Interest receivables can only come from loans to employees.

    <p>False (B)</p> Signup and view all the answers

    What percentage of receivables is estimated to be uncollectible based on past experience?

    <p>1%</p> Signup and view all the answers

    The allowance for bad debts is not considered in the __________ computation.

    <p>book</p> Signup and view all the answers

    Which of the following is NOT a cause of uncollectibility of accounts?

    <p>Increased sales volume (A)</p> Signup and view all the answers

    Match the accounting methods with their uses:

    <p>Allowance Method = Estimates bad debts based on a percentage of receivables Direct Write-off Method = Records bad debts directly when they are deemed uncollectible Percentage of Net Credit Sales = Calculates bad debts using net sales figure Percentage of Accounts Receivable = Uses total receivables to estimate doubtful accounts</p> Signup and view all the answers

    The experience rate of uncollectible accounts can vary based on a company's past performance.

    <p>True (A)</p> Signup and view all the answers

    What account is debited when estimating bad debts using the allowance method?

    <p>Bad Debts Expense</p> Signup and view all the answers

    What does the term 'proceeds' refer to in the context of notes?

    <p>The amount received by the endorser from the endorsee (A)</p> Signup and view all the answers

    A non-interest bearing note's maturity value is equal to its face amount.

    <p>True (A)</p> Signup and view all the answers

    What is the maturity date of a note?

    <p>The date when the note becomes due for payment.</p> Signup and view all the answers

    The formula for calculating the discount is D = MV x DR x ________.

    <p>DP</p> Signup and view all the answers

    Which option correctly describes a term of a note?

    <p>It can be expressed in days, months, or years. (D)</p> Signup and view all the answers

    The proceeds of a note are always less than its maturity value.

    <p>False (B)</p> Signup and view all the answers

    What is the purpose of the discount period?

    <p>It refers to the number of days from the date of discounting until the maturity date.</p> Signup and view all the answers

    What is the purpose of a voucher in financial transactions?

    <p>To serve as proof of payment (C)</p> Signup and view all the answers

    A voucher must be prepared only for cash payments.

    <p>False (B)</p> Signup and view all the answers

    A check register is a special journal that contains a __________ record of all checks issued.

    <p>chronological</p> Signup and view all the answers

    Match each term with its correct definition:

    <p>Drawee = The bank on which the check is drawn Payee = The one whose order the check is drawn Voucher = A document used as evidence of authority to pay cash Check Register = A record of all checks issued</p> Signup and view all the answers

    Which of the following statements about the voucher system is correct?

    <p>Vouchers must be prepared for each payment (A)</p> Signup and view all the answers

    What is compared to assure the accuracy of the billing process?

    <p>Invoice and receiving report</p> Signup and view all the answers

    Vouchers in the voucher system may be issued or paid at the same time.

    <p>False (B)</p> Signup and view all the answers

    Which of the following accounts is adjusted or closed to the Income Summary account?

    <p>Beginning Inventory (C)</p> Signup and view all the answers

    Freight Out is considered a selling expense.

    <p>True (A)</p> Signup and view all the answers

    What must be prepared first for every transaction that involves payment?

    <p>A voucher</p> Signup and view all the answers

    The total goods available for sale is the sum of __________ and net purchases.

    <p>Beginning Inventory</p> Signup and view all the answers

    Match the following expenses with their categories:

    <p>Salaries = Selling Expenses Store Supplies = Operating Expenses Advertising = Selling Expenses Freight Out = Selling Expenses</p> Signup and view all the answers

    What is recorded when setting up the ending inventory?

    <p>Cost of Goods Sold (C)</p> Signup and view all the answers

    Net sales are calculated by subtracting ending inventory from total sales.

    <p>False (B)</p> Signup and view all the answers

    What activities must be recorded when setting up ending inventory?

    <p>Activities that have not been previously recorded.</p> Signup and view all the answers

    What does Factory Overhead refer to in manufacturing costs?

    <p>Costs not classified as direct materials or direct labor (D)</p> Signup and view all the answers

    Direct Labor refers only to the wages of workers physically assembling the product.

    <p>False (B)</p> Signup and view all the answers

    What are Prime Costs composed of in manufacturing?

    <p>Direct Materials and Direct Labor</p> Signup and view all the answers

    Indirect materials are materials used in production which may form an integral part of the product but the cost is __________.

    <p>insignificant</p> Signup and view all the answers

    Which activity is part of the manufacturing process?

    <p>Selling finished goods (D)</p> Signup and view all the answers

    Match the elements of manufacturing costs with their definitions:

    <p>Direct Materials = Materials integral to the product Direct Labor = Labor costs for product conversion Factory Overhead = Costs not classified under direct costs Allocated Costs = Costs not easily traced to products</p> Signup and view all the answers

    Vouchers Payable is preferable to Accounts Payable in financial statements.

    <p>False (B)</p> Signup and view all the answers

    What is the primary purpose of a voucher register?

    <p>To record vouchers similar to a purchase journal</p> Signup and view all the answers

    What is a primary advantage of using special journals?

    <p>Reduces recording time (A)</p> Signup and view all the answers

    General journals are used for recording only repetitive transactions.

    <p>False (B)</p> Signup and view all the answers

    What types of transactions can be recorded in a general journal that cannot be recorded in special journals?

    <p>Sales returns, purchase returns, adjusting entries.</p> Signup and view all the answers

    The main disadvantage of not using special journals is that it leads to numerous postings from the journal to the __________.

    <p>general ledger</p> Signup and view all the answers

    Match the following types of journals with their specific uses:

    <p>Sales Journal = Records sales on account Purchase Journal = Records purchases on account Cash Receipts Journal = Records cash received from sales Cash Payments Journal = Records cash paid for purchases</p> Signup and view all the answers

    Which of the following is considered a disadvantage of using special journals?

    <p>Only one person can use the journals at a time (D)</p> Signup and view all the answers

    Using special journals can make tracing transactions faster and easier.

    <p>True (A)</p> Signup and view all the answers

    Special journals are primarily created to record __________ transactions in a more organized manner.

    <p>specific</p> Signup and view all the answers

    Which of the following accounts receivable aging categories has the highest estimated uncollectible accounts percentage?

    <p>181-360 days (C)</p> Signup and view all the answers

    A promissory note can only be issued for interest-bearing loans.

    <p>False (B)</p> Signup and view all the answers

    What is the role of the payee in a promissory note?

    <p>The payee receives payment upon the due date.</p> Signup and view all the answers

    The aging of accounts receivable is most commonly practiced in estimating __________ accounts.

    <p>uncollectible</p> Signup and view all the answers

    Maturity value of a non-interest bearing note is equal to the face amount of the note.

    <p>True (A)</p> Signup and view all the answers

    What is the term for the date when a note becomes due for payment?

    <p>Maturity Date</p> Signup and view all the answers

    What is typically used to support a loan in the form of a promissory note?

    <p>Written unconditional promise (C)</p> Signup and view all the answers

    The maturity value is equal to principal plus __________.

    <p>interest earned</p> Signup and view all the answers

    Match the following terms with their correct definitions:

    <p>Discount = Amount deducted from the maturity value Discount Rate = Rate charged by the bank upon discounting Discount Period = Number of days from discounting to maturity Interest Bearing Note = Note that provides payment of interest</p> Signup and view all the answers

    The maker of a promissory note is also known as the payee.

    <p>False (B)</p> Signup and view all the answers

    What amount is calculated for uncollectible accounts in the 31-60 days overdue category if the total receivables amount to P200,000?

    <p>P6,000</p> Signup and view all the answers

    What is the primary purpose of a Sales Journal?

    <p>To record sales on account (B)</p> Signup and view all the answers

    Which of the following statements about interest income is correct?

    <p>Interest income is the amount a creditor receives from the debtor. (B)</p> Signup and view all the answers

    An Official Receipt is not required when a business receives cash.

    <p>False (B)</p> Signup and view all the answers

    A perpetual inventory system requires physical counts to determine the balance of the Inventory account.

    <p>False (B)</p> Signup and view all the answers

    What is the general purpose of amortizing the cost of fixed assets?

    <p>To allocate the cost of the asset over its useful life</p> Signup and view all the answers

    What type of receivables represent a contractual right to receive cash or assets from another entity?

    <p>Accounts Receivables</p> Signup and view all the answers

    The __________ journal is used to track all collections, including cash.

    <p>Cash Receipts</p> Signup and view all the answers

    Match the following journals with their respective purposes:

    <p>Cash Payments Journal = Records cash disbursements Sales Journal = Records sales on account Cash Receipts Journal = Tracks all collections including cash General Journal = Records transactions not able to be entered in special journals</p> Signup and view all the answers

    Which of the following describes Trade Receivables?

    <p>Receivables from the sale of goods and services (C)</p> Signup and view all the answers

    Special journals generally decrease the organization of transaction records.

    <p>False (B)</p> Signup and view all the answers

    What is the purpose of a Cash Payments Journal?

    <p>To record all types of cash disbursements</p> Signup and view all the answers

    Which of the following are components of factory overhead?

    <p>Indirect labor (C)</p> Signup and view all the answers

    Direct labor includes all wages incurred in manufacturing finished goods.

    <p>True (A)</p> Signup and view all the answers

    Factory overhead includes indirect materials and __________.

    <p>indirect labor</p> Signup and view all the answers

    Match the manufacturing cost types with their definitions:

    <p>Direct Materials = Materials that become an integral part of the finished product Direct Labor = Labor costs for converting materials into products Factory Overhead = Costs not classified as direct materials or labor Allocated Costs = Costs that cannot be directly traced to any product</p> Signup and view all the answers

    What is Vouchers Payable used for in the voucher system?

    <p>To keep track of payments due under the voucher system (A)</p> Signup and view all the answers

    A check must always be recorded in the check register after payment.

    <p>True (A)</p> Signup and view all the answers

    Allocated costs are easily traceable to specific products.

    <p>False (B)</p> Signup and view all the answers

    A __________ is a written instrument that orders the bank to pay a specified sum of money.

    <p>check</p> Signup and view all the answers

    A ______ refers to any document that serves as authority to pay cash.

    <p>voucher</p> Signup and view all the answers

    Which statement about the voucher system is correct?

    <p>A voucher system involves verifying and recording liabilities. (A)</p> Signup and view all the answers

    A modified form of the cash payments journal is known as the check register.

    <p>True (A)</p> Signup and view all the answers

    What is required for the comparison of invoices prior to voucher preparation?

    <p>Receiving report</p> Signup and view all the answers

    Study Notes

    Recording Transactions in Special Journals

    • Journals are books of original entry, recording specific transactions repeatedly.
    • General Journals record all types of transactions chronologically.
    • Special Journals record one type of transaction, categorized by the nature of the transaction.

    Types of Journal Entries

    • General Journal: Records all types of business transactions chronologically.
    • Contains a chronological listing of transactions.
    • Records transactions not suitable for special journals, such as sales returns, purchase returns, adjusting entries, and non-cash investments.
    • Special Journals: Record specific transactions repeatedly, categorized to speed up accounting process.
    • Examples include sales journals (sales on account), purchase journals (purchases on account), cash receipts journals (cash sales and collections), and cash payments journals (cash payments).
    • Advantages include faster posting, reduced time, easier analysis of specific transactions, better division of labor, and easy retrieval of information.
    • Disadvantages include limited use for general transactions, requiring additional work, difficulty in retrieving general information, and restricting one-person use of the books.

    Journals and Their Uses

    • Sales Journal: Records sales on account, supported by sales invoices.
    • Purchase Journal: Records purchases on account, supported by invoices, delivery receipts, or purchase orders.
    • Cash Receipts Journal: Records all cash receipts—cash sales and collections—supported by official receipts.
    • Cash Payments Journal: Records all cash payments, supported by cash vouchers or check vouchers.

    Advantages of Using Special Journals

    • Division of labor is possible.
    • Recording time is reduced.
    • Posting to general ledger is minimized.
    • Information retrieval is enhanced.
    • More economical due to reduced time spent.
    • Tracing transactions is faster.
    • Easy analysis of transactions.

    Disadvantages of Not Using Special Journals

    • Limited use of journal.
    • Increased work, difficulty in retrieving general information.
    • Only one person can use books at a time.

    Special Considerations for Journal Entries

    • Journal entries can be interest-bearing or non-interest bearing depending on agreement between parties.
    • Some transactions may involve a promissory note from the maker, payable to the payee.
    • The face value of a note plus interest becomes the maturity value, due on the maturity date.
    • Notes receivables can be interest-bearing, while others may not.
    • The maturity date can be specified based on demand or a set period (e.g., one year after date, a certain number of days after date).
    • Accounts receivables do not always have promissory notes supporting them.
    • Documents supporting transactions recorded in special journals include sales invoices, purchase invoices, delivery receipts, purchase orders, official receipts, cash vouchers, and check vouchers.
    • A special journal is used for specific kinds of transactions. A journal voucher and a check voucher can support cash payments or receipts.

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    Description

    Test your knowledge of financial concepts, including maturity value calculations, interest computation, net proceeds, and definitions of various financial terms. This quiz includes matching exercises and situational questions to deepen your understanding of financial literacy.

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