1 A method of estimating bad debts expense that complies with GAAP is:

A. Direct write-off method. B. Income statement method. C. Aging of accounts receivable method. D. Both B and C

2

To record the collection of the written-off account, one must:

A. Credit Cash

B. Debit A/R

C. Credit A/R

D. None of the above

3

The components of an acquisition cost of PPE (Property, Plant & Equipment) must include:

A. Installation cost

B. Registration and legal costs

C. Costs that enhance capacity of the asset

D. All of the above

4

Which of the following statement is correct for Intangible Assets?

A. Intangible Assets are recorded at cost when purchased

B. Cost of Intangible Assets are amortized over estimated useful life

C. Intangible Assets do not have to be shown separately from PPE.

D. A and B

5

A company incorporated its business and incurred $$10,000 in Organization costs, it should:

A. Debit Cash for $10,000 on their books

B. Credit Cash for $10,000 on their books

C. Credit Organization costs for $10,000 on their books

D. None of the above

6

Which accounting principles would designate the Direct Write-off method as not in compliance with GAAP:

A. Materiality. B. Going concern. C. Matching. D. Both A and C