Separate accounts receivable information for each customer is important because it reveals all of the following except How much each customer has purchased on credit How much each customer has paid How much each customer still owes The basis for sending bills to customers When the customer intends to pay outstanding balances Question 2 1 Point A credit sale of $5,275 to a customer would result in which of the following? A debit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable subsidiary ledger A credit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable subsidiary ledger A debit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable subsidiary ledger A credit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable subsidiary ledger A credit to Sales and a credit to the customer's account in the accounts receivable subsidiary ledger Question 3 1 Point Sellers allow customers to use credit cards for all of the following reasons except: To be able to charge more due to fees and interest To lessen the risk of extending credit to customers who cannot pay To speed up receipt of cash from the credit sale To increase total sales volume To avoid having to evaluate a customer's credit standing for each. sale Question 4 1 Point A promissory note received from a customer in exchange for an account receivable is recorded by the payee as: A cash equivalent An account receivable An note receivable A short-term investment An note payable Question 5 1 Point Reporting the details of notes is consistent with which accounting principle that requires financial statements (including footnotes) to report all relevant information? Relevance Full disclosure Evaluation Materiality Matching Question 6 1 Point The account receivable turnover measures: How long it takes to sell accounts receivable to a factor How often, on average, receivables are received and collected during the period The relation of cash sales to credit sales How long it takes to sell merchandise inventory All of the options are correct Question 7 1 Point Which of the following is an accounting procedure that (1) estimates and reports bad debts expense from credit sales during the period the sales are recorded, and (2) reports accounts receivable at the estimated amount of cash to be collected? Allowance method of accounting for bad debts Aging of notes receivable Adjustment method for uncollectible debts Direct write-off method of accounting for bad debts Cash basis method of accounting for bad debts. Question 8 1 Point On December 31 of the current year, the unadjusted trial balance of a company using the percent of receivables method to estimate bad debt included the following: Accounts Receivable, debit balance of $95,250; Allowance for Doubtful Accounts, credit balance of $921. What amount should be debited to Bad Debts Expense, assuming 6% of outstanding accounts receivable at the end of the current year will be uncollectible? $5,715 $6,636 $4,794 $5,770 $5,660 Question 9 1 Point A company has $90,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 4% of outstanding receivables are uncollectible. The current balance (before adjustments) in the allowance for doubtful accounts is an $800 debit. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for: $3,600 $3,568 $3,632 $2,800 $4,400 Question 10 1 Point Brinker accepts all major bank credit cards, including First Savings Bank's, which assesses a 2.5% charge on sales for using its card. On May 26, Brinker had $4,800 in First Savings Bank Card credit sales. What entry should Brinker make on May 26 to record the deposit? Debit Accounts Receivable $4,800; credit Sales $4,800 Debit Cash $4,680; debit Credit Card Expense $120; credit Sales $4,800 Debit Cash $4,800; credit Sales $4,800 Debit Cash $4,920; credit Credit Card Expense $120; credit Sales $4,800 Debit Accounts Receivable $4,680; debit Credit Card Expense $120; credit Sales $4,800 Question 11 1 Point Plant assets are defined as Current assets Held for sale Tangible assets used in the operation of business that have a useful life of less than one accounting period Tangible assets that have a useful life of more than one accounting period and are used in the operation of a business Intangible assets used in the operations of a business that have a useful life of more than one accounting period Question 12 1 Point One characteristic of plant assets is that they are Current assets Used in operations Natural resources Long-term investments Intangible Question 13 1 Point The relevant factors in computing depreciation do not include Cost Salvage value Useful life Depreciation method Market value Question 14 1 Point Depreciation Measures the decline in market value of an asset Measures physical deterioration of an asset Is the process of allocating the cost of a plant asset to expense Is an outflow of cash from the use of a plant asset Is applied to land Question 15 1 Point The term inadequacy, as it relates to the useful life of an asset, refers to An asset that is worn out An asset that is no longer useful in producing goods and services The insufficient capacity of a company's plant assets to meet the company's growing production demands The condition where the salvage value is too small to replace the asset The condition where the asset's salvage value is less than its cost Question 16 1 Point The term, obsolescence, as it relates to the useful life of an asset, refers to The end of an asset's useful life A plant asset that is no longer useful in producing goods and services with a competitive advantage The insufficient capacity of a company's plant assets to meet the company's productive demands An asset's salvage value becoming less than its replacement cost Intangible assets that have been fully amortized Question 17 1 Point Once the estimated depreciation expense for an asset is calculated It cannot be changed, based on the historical cost principle Any changes are accumulated and recognized when the asset is sold The estimate itself cannot be changed; however, new information should be disclosed in financial statement footnotes It cannot be changed, based on the consistency principle It may be revised based on new information Question 18 1 Point A machine originally had an estimated useful life of 6 years, but after 4 complete years, it was decided that the original estimate of useful life should have been 10 years. At that point the remaining cost to be depreciated should be allocated over the remaining 2 years 4 years 6 years 10 years 16 years Question 19 1 Point Peavey Enterprises purchased a depreciable asset for $22,000 on April 1, Year 1. The asset will be depreciated using the straight-line method over its four-year useful life. Assuming the asset's salvage value is $2,000, Peavey Enterprises should recognize depreciation expense in Year 2 in the amount of $10,000 $5,000 $5,500 $20,000 $9,250 Question 20 1 Point An asset's book value is $18,000 on December 31, Year 5. The asset has been depreciated at an annual rate of $3,000 on the straight-line method. Assuming the asset is sold on December 31, Year 5 for $15,000, the company should record: A loss on sale of $12,000 A gain on sale of $12,000 Neither a gain nor a loss is recognized on this transaction A gain on sale of $3,000 A loss on sale of $3,000