1. Michelle Company reports $345,000 in credit sales and $267,500 in accounts receivable at the end of 2019. Michelle currently uses the income statement method to record bad debt estimation at 4%. To manage earnings more efficiently, Michelle changes bed debt estimation to the balance sheet method at 4%. How much is the difference in net income between the income statement and balance sheet methods?

A.$3,100

B.$13,800

C. $10,700

D. $77,500

2. Which of the following is true about earnings management?

A. Both A and C

B. It works within the constraints of GAAP.

C. It works outside the constraints of GAAP.

D. It tries to improve stakeholders views of the companys financial position.

3. Tines Commerce computes bad debt based on the allowance method. They determine their current years balance estimation to be a credit of $45,000. The previous period had a credit balance in Allowance for Doubtful Accounts of $12,000. What should be the reported figure in the adjusting entry for the current period?

A. $33,000

B. $12,000

C. $45,000

D. $57,000

4. Which of the following is not a criterion to recognize revenue under GAAP?

A. Cash must be collected.

B. The earnings process must be completed.

C. A product or service must be provided.

D. GAAP requires that the accrual basis accounting principle be used in the revenue recognition process.

5. A car dealership sells a car to a customer for $35,000. The customer makes a 10% down payment, and the dealership finances the remaining 90% in-house. How much will the car dealership record in Accounts Receivable for this customer?

A. $31,500

B. $19,250

C. $8,750

D. $7,000