31. Which of the following methods of accounting for uncollectible accounts matches sales with bad debts expense?

A) direct write-off method

B) allowance method

C) contra-asset method

D) reconciliation method

32. The allowance for uncollectible accounts is a(n) ________.

A) contra-expense account

B) contra-revenue account

C) contra-asset account

D) expense account

33. Which of the following statements is FALSEabout the allowance method for uncollectible accounts?

A) Bad debt expense is estimated and matched with sales.

B) Expense is recorded during end of the period adjustments.

C) This method is not acceptable under GAAP.

D) The method is acceptable under GAAP.

39. What is the effect on the accounting equation when a company collects an account receivable?

A) Total assets increase, total liabilities increase, and total shareholders equity stays the same.

B) Total assets stay the same, total liabilities stay the same, and total shareholders equity stays the same.

C) Total assets decrease, total liabilities stay the same, and total shareholders equity decreases.

D) Total assets stay the same, total liabilities increases, and total shareholders equity decreases.

42. Credit card sales benefit companies because ________.

A) the risk of uncollectible accounts is transferred to credit card companies

B) fewer customers will be able to buy products or services

C) the credit card company is not responsible for evaluating customers credit-worthiness

D) they will receive less than the full amount of the sale from the credit card company

44. Team Shirts decided to accept bankcards from credit customers. Team Shirts should expect ________.

A) an increase in its allowance for uncollectible accounts

B) a decrease in its bad debts expense

C) a decrease in its credit card expense

D) an increase in its write-off of specific customer accounts

45. Magic Cow Co. made a sale for $5,000 to a customer who paid with MasterCard. MasterCard charges Magic Cow a fee of 3% of sales. MasterCard will directly deposit the cash from this sale within 24 hours. How much cash will MasterCard deposit?

A) $5,000

B) $4,850

C) $150

D) $5,150

47. Magic Cow Co. made a sale for $5,000 to a customer who paid with MasterCard. MasterCard charges Magic Cow a fee of 3% of sales. How much sales revenue will Magic Cow record?

A) $5,000

B) $4,850

C) $150

D) $5,150

48. Ace Electronics accepted a promissory note from Fenstermaker, who promised to pay Ace $2,000 plus 6% interest at the end of six months. What is the amount of interest that will be paid at the end of the six-month period?

A) $120

B) $240

C) $60

D) $2,060

49. Ace Electronics accepted a promissory note from Fenstermaker, who promised to pay Ace $2,000 plus 6% interest at the end of six months. When Ace first accepts the note, it should record interest receivable of ________.

A) $120

B) $0

C) $60

D) $240