Question
) Indicate whether the following are TRUE or FALSE. 1. A company had net sales of $545,000 and cost of goods sold of $345,000. Its
) Indicate whether the following are TRUE or FALSE.
1. | A company had net sales of $545,000 and cost of goods sold of $345,000. Its gross margin equals $890,000.
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2. | An accelerated depreciation method creates a larger depreciation charge as the asset comes closer to the end of its useful life. |
3. | Units of Production is an accelerated depreciation method. |
_____ 4. | The term depletion as applied to intangible assets follows the matching principle. |
_____5. | Even if the end of an accounting period occurs between the signing of a note payable and its maturity date, the matching principle requires that interest expense not be accrued on a note payable until the note is paid.
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_____6. | An estimated liability is a POSSIBLE obligation if a certain event occurs. |
_____7. | The estimated realizable accounts receivable is what the company anticipates that it will collect. |
_____8. | The term capitalizing a cost means charging it to stockholders equity. |
_____9. | The working capital (current) ratio is an indicator of a companys liquidity. |
_____10. | Accounts Receivable is an example of an intangible asset. |
_____11. | Merchandise Inventory would be debited when goods are purchased by a company that uses a periodic inventory system. |
_____12. | Accumulated depreciation is an account that appears in the income statement. |
_____13. | Sales Discounts is added to the Sales account when computing a company's net sales.
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_____14. | If goods are shipped FOB destination, the seller records revenue from the sale when the goods arrive at their destination when the transaction is complete.
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_____15. | Plant assets are reported on a balance sheet at their adjusted fair market value through depreciation. . |
_____16. | Canceled checks are checks the bank has paid and deducted from the customer's account during the period.
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_____17. | The matching principle permits the use of the direct write-off method of accounting for uncollectible accounts when bad debts are very large in relation to a company's other financial statement items such as sales and net income.
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_____18. | Deferred income is an example of a revenue account that increases equity. |
_____19. | A credit memo on a bank statement is an example of a timing difference. |
_____20. |
Federal laws prohibit the selling of accounts receivables to factors.
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