Under the percentage of sales basis to estimate uncollectible accounts using the allowance method, management establishes a percentage relationship between the amount of credit sales and expected losses from uncollectible accounts. The expected bad debt losses are determined by applying the percentage to the sales base of the current period. This basis better matches expenses with revenues. *

True

False

A company had outstanding 80,000 shares of $10 par value common stock. During the period a 10% stock dividend was declared and distributed. The market value was $25 a share. As a result of this stock dividend, retained earnings should decrease by $200,000. *

True

False

Three important dates when cash dividends are involved are the date of declaration, date of record, and date of payment. *

True

False

When computing interest on notes receivables, the formula for computing interest is face value times annual interest rate times time in terms of one year. For a note stated in months, time is the number of months divided by 12. When a note is stated in days, time is the number of days divided by 360. *

True

False