1 of 35

When companies extend credit to customers

	the likelihood of not collecting money from customers increases.
	sales generally decrease.
	the likelihood of not collecting money from customers decreases.
	the amount of business stays the same.

Question

2 of 35

Once an Account Receivable is written off, can a business ever collect that money?

	No. GAAP does not allow a company to collect any amounts from a customer who has had an account written off.
	Only when using the allowance method can a company collect from a customer who has had an account written off.
	Only when using the direct write-off method can a company collect from a customer who has had an account written off.
	Both the allowance and direct write-off methods permit a company to collect from a customer who has had an account written off.

Question

3 of 35

Under the direct write-off method, to record the receipt of cash after an account has previously being written off, you would first

	debit Bad Debt Expense.
	debit Allowance for Doubtful Accounts.
	reinstate the customer's account.
	debit Cash and credit the customer's account.

Question

4 of 35

Which of the following is NOT true concerning NSF checks?

	NSF checks represent customer checks that the business previously deposited but have turned out to be worthless.
	The amount of the NSF check will need to be added to the book balance.
	NSF stands for nonsufficient funds.
	The amount of the NSF check will need to be subtracted from the book balance.

Question

5 of 35

The process of acquiring merchandise from a supplier begins with the

	receiving report.
	purchase order.
	invoice.
	check for payment.

Question

6 of 35

Leo's Lawn Care purchased equipment on January 1. The cost was $15,000, and the equipment had a residual value of $4,000. The equipment was given a useful life of 7 years. After the end of two years, it was determined that the equipment would be obsolete in 3 more years, and the residual value would still be $4,000. What will be the depreciation under the straight-line method to the nearest dollar for the third year?

	$2,619
	$7,857
	$3,142
	$1,571

Question

7 of 35

Goodwill is defined as

	liabilities minus assets.
	the acquisition costs of a franchise.
	excess of the cost of the purchase of a business over the market value of its net assets.
	assets minus liabilities.

Question

8 of 35

On March 15, Diego paid $4,750 to Island, Inc. to fulfill his promissory note agreement. Of the $4,750, $750 is interest. The journal entry Island, Inc. will record is to

	debit Cash, $4,750; credit Note Receivable/Diego, $4,750.
	debit Note Receivable/Diego, $4,750; credit Cash $4,750.
	debit Note Receivable/Diego, $4,750; credit Cash $4,700; credit Interest Revenue $750.
	debit Cash, $4,750; credit Note Receivable/Diego, $4,000; credit Interest Revenue, $750.

Question

9 of 35

The period end adjusting entry for bad debt expense under the allowance method is

	Cash, debit; Accounts Receivable/customer name, credit.
	not required.
	Bad Debt Expense, debit; Accounts Receivable/customer name, credit.
	Bad Debt Expense, debit; Allowance for Uncollectible Accounts, credit.

Question

10 of 35

Which would be considered part of land improvements?

	Signs
	Removing unwanted buildings from the land
	Fencing
	In-ground sprinkler systems

Question

11 of 35

An 83-day note that was issued on November 13, 2014 would have matured on

	February 5, 2015.
	February 4, 2015.
	February 2, 2015.
	February 3, 2015.

Question

12 of 35

Which intangible asset is recorded only when an acquiring company purchases another company?

	Goodwill
	Trademark
	Franchise
	Brand name