An aging of a company”s accounts receivable indicates that $9,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $3,200 debit balance, the adjustment to record bad debts for the period will require a
A. debit to Bad Debt Expense for $9,000. Incorrect
B. debit to Bad Debt Expense for $12,200.
C. debit to Bad Debt Expense for $5,800.
D. credit to Allowance for Doubtful Accounts for $9,000.
Bad Debt Expense is considered
A. an avoidable cost in doing business on a credit basis.
B. an internal control weakness.
C. a necessary risk of doing business on a credit basis.
D. avoidable unless there is a recession.
Bad Debt Expense is reported on the income statement as
A. part of cost of goods sold.
B. an expense subtracted from net sales to determine gross profit.
C. an operating expense. Correct
D. a contra revenue account.
The account Allowance for Doubtful Accounts is classified as a(n)
B. contra account of Bad Debt Expense.
D. contra account to Accounts Receivable.
The accounts receivable turnover is computed by dividing
A. total sales by average receivables.
B. total sales by ending receivables.
C. net credit sales by average receivables.
D. net credit sales by ending receivables.
The face value of a note refers to the amount
A. that can be received if sold to a factor.
B. borrowed plus interest received at maturity from the maker.
C. at which the note receivable is recorded.
D. remaining after a service charge has been deducted.
The term "receivables" refers to
A. amounts due from individuals or companies.
B. merchandise to be collected from individuals or companies.
C. cash to be paid to creditors.
D. cash to be paid to debtors.
Under the allowance method, Bad Debt Expense is recorded
A. when an individual account is written off.
B. when the loss amount is known.
C. for an amount that the company estimates it will not collect.
D. several times during the accounting period.
Depreciation is a process of
A. asset devaluation.
B. cost accumulation.
C. cost allocation.
D. asset valuation.
The balance in the Accumulated Depreciation account represents the
A. cash fund to be used to replace plant assets.
B. amount to be deducted from the cost of the plant asset to arrive at its fair market value.
C. amount charged to expense in the current period.
D. amount charged to expense since the acquisition of the plant asset
The declining-balance method of depreciation produces a(n)
A. decreasing depreciation expense each period.
B. increasing depreciation expense each period.
C. declining percentage rate each period.
D. constant amount of depreciation expense each period.
Which depreciation method is most frequently used in businesses today?
A cash register tape shows cash sales of $8,000 and sales taxes of $400. The journal entry to record this information is
A company receives $264, of which $24 is for sales tax. The journal entry to record the sale would include a
A. debit to Sales Taxes Expense for $24.
B. credit to Sales Taxes Payable for $24.
C. debit to Sales Revenue for $264.
D. debit to Cash for $240.
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Bonds are not always categorized as
A. callable or convertible.
B. term or serial.
C. secured or unsecured.
D. secured or debenture.
If bonds are issued at a discount, it means that the
A. financial strength of the issuer is suspect.
B. market interest rate is higher than the contractual interest rate.
C. market interest rate is lower than the contractual interest rate.
D. bondholder will receive effectively less interest than the contractual rate of interest.
If the market rate of interest is lower than the contractual interest rate, the bonds will sell at
A. face value.
B. a premium.
C. a discount.
D. an unknown amount.
Secured bonds are bonds that
A. are in the possession of a bank.
B. can be converted into common stock.
C. have specific assets of the issuer pledged as collateral.
D. mature in installments.
A. represents what a share of stock is worth.
B. represents the original selling price for a share of stock.
C. is established for a share of stock after it is issued.
D. is the value assigned per share in the corporate charter.
Stockholders of a corporation directly elect
A. the president of the corporation.
B. the board of directors.
C. the treasurer of the corporation.
D. all of the employees of the corporation.
The ability of a corporation to obtain capital is
A. enhanced because of limited liability and ease of share transferability.
B. less than a partnership.
C. restricted because of the limited life of the corporation.
D. about the same as a partnership.
The two ways that a corporation can be classified by ownership are
A. publicly held and privately held.
B. stock and non-stock.
C. inside and outside.
D. majority and minority.
Treasury stock is
A. stock issued by the U.S. Treasury Department.
B. stock purchased by a corporation and held as an investment in its treasury.
C. corporate stock issued by the treasurer of a company.
D. a corporation”s own stock, which has been reacquired and held for future use
Under the corporate form of business organization
A. a stockholder is personally liable for the debts of the corporation.
B. stockholders” acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation.
C. the corporation”s life is stipulated in its charter.
D. stockholders wishing to sell their corporation shares must get the approval of other stockholders.
A business organized as a separate legal entity owned by stockholders is a partnership.
A stockholder has the right to vote in the election of the board of directors.
Preferred stock has contractual preference over common stock in certain areas.
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