Note 23 - exam prep PDF

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___ is the allocation of the cost and long-lived, tangible asset over its useful like creating an expense on the income statement that is matched against the revenue generated by using the asset - depreciation

___ receivable arise from making sales to customers on account and are non interest bearing. ___ receivable are formal written contracts that are interest bearing - Accounts; notes

A subsidiary account - is kept for each customer's account receivable and the total of all its customers' accounts receivable is reported on the balance sheet

ABC Corp received a 2 month, 8% per year, $1500 note receivable on December 1. The adjusting entry on December 31 will includes a - debit to interest receivable of $10

ABC, Inc's unadjusted trial balance included Accounts Receivable $80,000 debit; Allowance for doubtful accounts $750 credit; and credit sales $400,000 credit. ABC uses the aging of accounts receivable method and estimates that $8,000 of its receivables will be uncollectable. After the adjusting entry is made, ABC's financial statements will report___ - Bad debt expense of $7250 on the income statement; allowance for doubtful accounts of $8000 on the balance sheet

Acme, Inc.'s balance sheet shows equipment at a cost of $5,000,000. Accumulated depreciation is $2,000,000. Acme's income statement shows depreciation expense of $200,000 for the year. Which of the following statements is true - 4% of the equipment's economic benefit was used up this year

Allowance for Doubtful Accounts is a ____ - asset account and has a normal ___ balance - contra; credit

An ___ of accounts receivables method is based on the amount of days the receivables have been unpaid. When determining the desired amount of the allowance for doubtful accounts, the older receivables are assignned a higher percent than newer ones - Aging

An intangible asset may be recorded only if - purchased

At the end of the asset's useful life, its - accumulated depreciation will equal the asset's depreciable cost; book (or carrying) value will equal the asset's residual value

Bad debt expense - is a cost of extending credit to customers; is an estimate

Bitter, Inc's income statement included $100,000 of revenues; $60,000 of cost of goods sold; $20,000 of other operating expenses (which includes $10,000 of depreciation); $1,000 of interest expense; and $6,000 of income tax expense. EBITDA equals - $30,000

By comparing the number of days to collect with the length of the credit policy, companies can infer that customers _____ if the days to collect is high - may be dissatisfied with the product or service; are more likely to default

Collection of a previously written off account is called a - recovery

Company A and Company B both purchased a $100,000 machine with an estimated useful life of 10 years. Company A uses straight-line and Company B uses double-declining balance. At the end of the third year, both sell the machines for the exact same amount. Since different depreciation methods were used, the entry to record the disposal will result in different amounts of - debits to the accumulated depreciation accounts; gains or losses

Delectable, Inc.'s unadjusted trial balance includes accounts receivable of $10,000; allowance for doubtful accounts of $50 credit balance; and credit sales of $100,000; allowance for doubtful accounts of $50 credit balance, and credit sales of $100,000. Based on aging of its receivable, management estimates that $1,000 of receivables will be uncollectable. Delectable's financial statements will show Allowance for doubtful accounts of $1000; bad debt expense of $950

During the year, ABC Corp realizes that a particular customer will never pay. What action should ABC take? - Write off the uncollectable account and its corresponding allowance from the accounting records

Expenditures of a US pharmaceutical company would NOT be capitalized - development costs related to new untested drugs; research cost

Extraordinary repairs to long lived assets are___ because they are large expenditures and increase the useful life of the asset - capitalized

If a company is debiting interest receivable and crediting interest revenue, what must be the case - it is the end of the accounting period and it s adjusting entry for interest generated but not yet collected

If a company is debiting Interest Receivable and crediting Interest revenue, what must be the case? - It is the end of the accounting period and it is adjusting entry for interest generated but not yet collected

If the allowance for doubtful accounts has a credit balance prior to recording the adjusting entry for the current period's uncullective accounts, then the - estimated amounts of uncollectables was greater than the amounts actually written off

Interest receivable - the amount of interest earned but not yet collected

Management estimates that 1% of the $100,000 of credit sales will be uncollectable. The allowance for Doubtful accounts has a $100 unadjusted credit balance. After the adjusting entry is recorded, Bad Debt expense on the income statement wil be ___ the allowance for doubtful accounts on the balance sheet $100 less than

Net sales revenue is $730,000. Beginning and ending net accounts receivable are $62,000 and $58,000 respectively. Calculate the days to collect - 30 days

Notes receivable - principle amount

Notes recievable are used for - selling large dollar-value items; extending payment periods; lending money to individuals or businesses

On Jan 1, 2018, Whittle, Inc purchased timber rights for $2,000,000 which is expected to produce a total of 2,000,000 cords of wood over 4 years, after which it will be sold for $500,000. The cords of wood cut were 200,000 in 2018. The effect of recording the 2018 depletion (not the sale of wood) on the accounting equation is - The asset, timber inventory, is increased; assets are decreased by increasing the contra-account, accumulated depletion

On January 1, 2018, Whittle, Inc. purchased timber rights for $2,000,000, which are expected to produce a total of 2,000,000 cords of wood over 4 years, after which it will be sold for $500,000. The cords of wood cut were 200,000 in 2018 and 280,000 in 2019. Depletion for 2018 equals - 150,000

On June 22, 2018, Ace Electronics sold an office building, which was not yet fully depreciated. How many months of depreciation expense should ace record on the building for 2018? - 6

On November 1, 2018, Lendem Inc loaned an employee $100,000 at 6% with both the interest and principle due in 1 year. The adjusting entry to record the interest generated but not received as of December 31, 2018 includes a debit to - interest receivable of $1,000

On which financial statement is accumulated depreciation on - balance sheet

On which financial statement is depreciation expense on - income statement

Place the events in proper sequence putting the first step on top for a 2-year note established in november that pays interest annually- debit notes recievable and credit cash; debit cash and credit interest receivable; debit cash and credit notes receivable, interest revenue and interest recceivable; debit interest receivable and credit interest revenue - debit notes receivable and credit cash; debit interest receivable and credit interest revenue; debit cash and credit interest receivable; debit cash and credit ntoes receivable, interest revenue and interest receivable

Put in order for typical sequence of accounting for sales made on account using the alance methodAccounts recievable are debited in the period the revenue is recognized, specific customer balances are written off, bad debt expense is estimated and recorded with an adjusting entry - accounts receivable are debited in the period the revenue is recognized; bad debt expense is estimated and recorded with an adjusting entry; specific customer balances are written off

T/F: allowance for doubtful accounts is used for accounts receivable but not notes receivable - false

The ___ write-off method is not allowed under GAAP - direct

The 2 steps required using the allowance method, are to - later write-off specific customer balances when they are known to be uncollectable; first make an end of period adjustment to record the estimated bad debts

THe adjusting entry to record the estimated amount of bad credit sales is a debit to Bad Debt Expense and a credit to ____ ____ ____ ____ - allowance for doubtful accounts...