Assuming That the Ideal Measure of Short-Term Receivables in the Statement

question 60

Multiple Choice

Assuming that the ideal measure of short-term receivables in the statement of financial position is the discounted value of the cash to be received in the future, failure to follow this practice usually does NOT make the financial statements misleading because

• A) most short-term receivables are not interest-bearing.
• B) the allowance for uncollectible accounts includes a discount element.
• C) the amount of the discount is not material.
• D) most receivables can be sold to a bank or factor.

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Definitions:

Internal Controls

The policies and procedures used to safeguard assets, ensure accurate business information, and ensure compliance with laws and regulations.

Petty Cash

A small amount of cash on hand used for minor or incidental expenses.

Ledger Account

A set of accounts in a ledger that provides a record of financial transactions categorized by account type.

Record-Keeping Function

The systematic process of organizing and maintaining financial documents and records of a company.