Question
TRUE or FALSE 1) A company uses the direct write-off method to account for uncollectible receivables. Uncollectible account expense will be estimated as a percentage
TRUE or FALSE
1) A company uses the direct write-off method to account for uncollectible receivables. Uncollectible account expense will be estimated as a percentage of sales.
______
2) The direct write-off method is used primarily by large, publicly owned companies. ______
3) Interest revenue must be reported for a note receivable that is outstanding at the end of the accounting period.
______
4) The maturity value of a note is the sum of the principal plus interest due at maturity.
______
5) A note is dishonored when the maker of the note fails to pay the note at maturity
______
6) The acid-test ratio appears in the current assets section of the balance sheet.
______
7) Accounts receivable amounts are generally shown on the balance sheet net of the allowance.
______
8) The acid-test ratio is computed as current assets divided by current liabilities.
______
9) When a business discounts a note receivable to a bank or financial broker, the business will generally receive either more or less than the maturity value of the note.
______
10) When a business is holding a note receivable and wishes to collect cash prior to the maturity date of the note, the business may sell the note to a bank or a financial broker. This process is called discounting a note.
______
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