Financial Terms and Calculations Quiz

What is the formula for calculating Maturity Value?

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

What is the formula to compute Interest?

Net Proceeds are calculated by subtracting __________ from Maturity Value.

Match the financial terms with their definitions:

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

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

What does the term 'Interest Expense' signify?

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

Net Sales is calculated by subtracting discounts from total sales.

What is the purpose of setting up Ending Inventory?

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

Promissory notes can only be interest-bearing.

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

Match the expenses with their respective descriptions:

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

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

Which of the following activities has not been previously recorded?

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

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

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

What type of transaction could result in a promissory note?

The maker of a promissory note is considered the lender.

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

What is a voucher primarily used for?

A check must be recorded in the voucher register.

What must be done before the preparations of vouchers?

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

Match the following terms with their definitions:

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

What does maturity value refer to?

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

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

What is indicated by depreciation expense in the financial statements?

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

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

Which of the following represents the calculation for discount?

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

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

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

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

What are prime costs in manufacturing?

Factory overhead is known as __________ or factory burden.

What is a voucher register used for?

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

What are two components of prime costs?

What is the primary function of a special journal?

Using special journals can help to reduce recording time.

What is one disadvantage of not using special journals?

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

Match the types of journals with their corresponding transactions:

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

More economical operation is an advantage of using special journals.

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

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

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

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

The net realizable value for accounts is $__________.

Match the following terms with their descriptions related to notes:

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

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

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

What is a promissory note?

Notes Receivable and Notes Payable are the same.

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

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

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

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

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

What is the first step in adjusting beginning inventory?

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

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

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

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

Match the following accounts with their descriptions:

What is included in net sales calculation?

What record is used for tracking checks issued?

What does the term 'Carrying Amount' refer to?

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

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

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

Which of the following statements about interest is correct?

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

Explain the term 'Discounting Notes'.

What does a voucher primarily serve as?

Checks must be issued before a voucher can be prepared.

What must be verified before the preparation of vouchers?

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

Which of the following best describes the voucher system?

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

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

Which factor is NOT a cause of uncollectibility of accounts?

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

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

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

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

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

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

Match the terms with their definitions related to bad debts:

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

Interest receivables are included when preparing a purchases journal.

Which account is credited when closing the beginning inventory account?

What account is affected when recognizing an estimated uncollectible account?

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

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

Which components are considered Prime Costs?

Factory Overhead includes direct labor costs.

What is the role of a voucher register?

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

Match the following elements of manufacturing costs with their definitions:

What costs fall under Conversion Costs?

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

Name one example of an indirect material used in production.

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

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

What does 'interest income' refer to?

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

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

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

What does the term 'discount period' refer to?

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

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

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

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

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

Match the following types of notes with their characteristics:

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

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

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

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

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

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

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

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

What is the purpose of discounting notes?

What is the main purpose of the Cash Receipts Journal?

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

What type of receivables are considered Trade Receivables?

The __________ Journal records all cash disbursements.

Match the following types of journals with their purpose:

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

Accounts Receivables are supported by promissory notes.

What is the function of the General Journal?

What is the primary document used for cash payment?

Interest receivables can only come from loans to employees.

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

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

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

Match the accounting methods with their uses:

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

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

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

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

What is the maturity date of a note?

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

Which option correctly describes a term of a note?

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

What is the purpose of the discount period?

What is the purpose of a voucher in financial transactions?

A voucher must be prepared only for cash payments.

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

Match each term with its correct definition:

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

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

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

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

Freight Out is considered a selling expense.

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

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

Match the following expenses with their categories:

What is recorded when setting up the ending inventory?

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

What activities must be recorded when setting up ending inventory?

What does Factory Overhead refer to in manufacturing costs?

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

What are Prime Costs composed of in manufacturing?

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

Which activity is part of the manufacturing process?

Match the elements of manufacturing costs with their definitions:

Vouchers Payable is preferable to Accounts Payable in financial statements.

What is the primary purpose of a voucher register?

What is a primary advantage of using special journals?

General journals are used for recording only repetitive transactions.

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

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

Match the following types of journals with their specific uses:

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

Using special journals can make tracing transactions faster and easier.

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

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

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

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

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

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

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

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

The maturity value is equal to principal plus __________.

Match the following terms with their correct definitions:

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

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

What is the primary purpose of a Sales Journal?

Which of the following statements about interest income is correct?

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

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

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

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

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

Match the following journals with their respective purposes:

Which of the following describes Trade Receivables?

Special journals generally decrease the organization of transaction records.

What is the purpose of a Cash Payments Journal?

Which of the following are components of factory overhead?

Direct labor includes all wages incurred in manufacturing finished goods.

Factory overhead includes indirect materials and __________.

Match the manufacturing cost types with their definitions:

What is Vouchers Payable used for in the voucher system?

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

Allocated costs are easily traceable to specific products.

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

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

Which statement about the voucher system is correct?

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

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