13. A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and their length of time past due is the: (Points : 2) Direct write-off method Aging of accounts receivable method Percentage of sales method Aging of investments method Percent of accounts receivable method 14. On December 31, 2010, Stable Company sold a piece of equipment that was purchased on January 1, 2005. The equipment originally cost $820,000 and has an estimated useful life of eight years. Stable uses the straight-line method of depreciation. What is the gain/loss on the sale of equipment that Stable will recognize if the equipment was sold for $230,000? (Points : 2) $230,000 Gain $25,000 Loss $25,000 Gain $73,750 Gain . $0; no gain or loss 15. Many companies use accelerated depreciation in computing taxable income because: (Points : 2) It is required by the tax rules It is required by financial reporting rules It postpones tax payments until later years and the company can use the resources now to earn additional income before payment is due Using it causes a company to use higher income in the early years of the asset's useful life The results are identical to straight-line depreciation 16. The matching principle requires: (Points : 2) That expenses be ignored if their effect on the financial statements are less important than revenues to the financial statement user The use of the direct write-off method for bad debts The use of the allowance method of accounting for bad debts That bad debts be disclosed in the financial statements That bad debts not be written off 17. The useful life of a plant asset is: (Points : 2) The length of time it is used productively in a company's operations Never related to its physical life Its productive life, but not to exceed one year Determined by the FASB Determined by law 18. A copyright: (Points : 2) Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 70 years Is an exclusive right granted to its owner to manufacture and sell a device or to use a process for 17 years Is an exclusive right granted to its owner to manufacture and sell a device or to use a process for 50 years Is the amount by which the value of a company exceeds the fair market value of a company's net assets if purchased separately Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 17 years 19. A company has net sales of $870,000 and average accounts receivable of $174,000. What is its accounts receivable turnover for the period? (Points : 2) 0.20 5.00 20.0 73.0 1,825 20. Extraordinary repairs: (Points : 2) Are revenue expenditures Extend an asset's useful life beyond its original estimate Are credited to accumulated depreciation Are additional costs of plant assets that do not materially increase the asset's life Are expensed as incurred 21. The buyer who pays cash for an account receivable referred to as a: (Points : 2) Payor Pledgor Factor Payee Pledgee 22. Dell reported net sales of $8,739 million and average accounts receivable of $864 million. Its accounts receivable turnover is: (Points : 2) 0.90 10.1 36.1 50.0 3,686 23. Failure by a promissory note's maker to pay the amount due at maturity is known as: (Points : 2) Protesting a note Closing a note Dishonoring a note Discounting a note Depreciating a note 24. Cardco Inc. has an annual accounting period which ends on December 31. During the current year a depreciable asset which cost $42,000 was purchased on September 2. The asset has a $4,000 estimated salvage value. The company uses straight-line depreciation and expects the asset to have a 5 year life. What is the total depreciation expense for the current year? (Points : 2) $1,900.00 $7,600.00 $2,533.33 $2,800.00 $3,166.67 25. Pepsi's accounts receivable turnover was 9.9 for this year and 11.0 for last year. Coke's turnover was 9.3 for this year and 9.3 for last year. These results imply that: (Points : 2) Coke has the better turnover for both years Pepsi has the better turnover for both years Coke's turnover is improving Coke's credit policies are too loose Coke is collecting its receivables more quickly than Pepsi in both years