Recognizing accounts receivable occurs when a company sells merchandise and a customer uses the company's own credit card. Credit card sales result in a debit to Accounts Receivable and a credit to Sales. If customers fail to pay within a specified period (usually 30 days), the seller adds interest. The interest is debited to Accounts Receivable and credited to Interest Revenue. *

True

False

Three factors that affect the computation of depreciation of an asset are cost, useful value, and salvage life of the asset. *

True

False

The maturity value of a $5,000 note is $5,250. If $100 of the interest has been accrued prior to maturity, the entry to record the honoring of the note at maturity should include a credit to Interest Revenue for $250. *

True

False

A current liability is a debt that can reasonably be expected to be paid from existing current assets or through the creation of other current liabilities, and the timeframe is either within one year or the operating cycle, whichever is longer. *

True

False