1) "Allowance for Doubtful Accounts" is a(n)

a.liability account.

b.current asset.

c.expense account.

d.contra account.

2) Which of the following approaches to determine bad debts expense best achieves the matching concept?

a.Percentage of ending accounts receivable.

b.Percentage of sales.

c.Percentage of average accounts receivable.

d.Direct write off.

3) Assume Sentinal Corp., an equipment distributor, sells a piece of machinery with a list price of $700,000 to Arch Inc. Arch Inc. will pay $725,000 in one year. Sentinal Corp. normally sells this type of equipment for 80% of list price. How much should be recorded as revenue?

a.$725,000

b.$560,000

c.$580,000

d.$700,000

4) The straight-line method of amortization of discounts and premiums for long-term notes

a.reflects the economic reality of the loan.

b.requires more complicated calculations than the effective interest method.

c.is only allowed by ASPE.

d.is allowed by both IFRS and ASPE.