Q1

On February 1, 2013, Fugit Company sells merchandise on account to Armen Company for $6,500. The entry to record this transaction by Fugit Company is

A.

Accounts Receivable	6,500
Sales Revenue		6,500

B.

Cash	6,500
Sales Revenue		6,500

C.

Notes Receivable	6,500
Accounts Receivable		6,500

D.

Sales Revenue	6,500
Accounts Payable		6,500

Q2

Under the direct write-off method of accounting for uncollectible accounts

A.

the allowance account is increased for the actual amount of bad debt at the time of write-off.

B.

bad debts expense is always recorded in the period in which the revenue was recorded.

C.

balance sheet relationships are emphasized.

D.

a specific account receivable is decreased for the actual amount of bad debt at the time of write-off.

Q3

A purchased patent has a legal life of 20 years. It should be

	A.	not amortized.
	B.	expensed in the year of acquisition.
	C.	amortized over its useful life if less than 20 years.
	D.	amortized over 20 years regardless of its useful life.