Discussion questions will be evaluated based on:
1. Briefly describes the flow of cash among receivables, cash, and marketable securities.
2. Different categories of financial assets are valued differently in the balance sheet. These different valuation methods have one common goals . Explain.
3. What are cash equivalents? Provide two examples why are the items often combined with cash for the purpose of balance sheet presentation?
7. Why are investments in marketable securities shown separately from cash equivalents in the balance sheet?
8. Explain the fair value adjustment procedure for marketable equity securities.
10. Explain the relationship between the matching principal and the need to estimate uncollectible accounts receivable.
11. In making the annual adjusting entry for uncollectible accounts, a company may utilize a balance sheet approach to make the estimates, or it may use an income statement approach. Explain these two alternative approaches.
14. Explain how each of the following is presented in a multiple-step income statement .
a. Sales of marketable securities at a loss.
b. Adjusting entry to create ( or increase ) the allowance for doubtful accounts.
c. Entry to write off an uncollectible account against the allowance
d. Adjusting entry to increase the balance in the marketable securities account to a higher market value.
15. What is the formula for computing interest on a note receivable, and what does each term means?