Which of the following would not be used to help a company determine the net realizable value of its accounts receivable?

a. Industry averages and trends

b. The companys ability to pay its own debts

c. Current economic conditions

d. Efficiency of the companys collection procedures

2. Which principle states that expenses should be recorded in the period in which they help generate revenues?

a. Matching principle

b. Going concern principle

c. Cost/benefit analysis

d. Measurement principle

3. SunFun Company manufactures lawn furniture that is sold to retailers like big box home improvement stores. During October 20X1, SunFun sold furniture to Home Place on account in the amount of $40,000. At the end of 20X1, the balance was still outstanding. In January 20X2, SunFun decided to write off this particular account as it did not appear the balance would ever be collected. Choose the correct journal entry for this transaction below.

a. Figure 7.16

b. Figure 7.17

c. Figure 7.18

d. Figure 7.19

4. Ornate Inc. ended 20X3 with $400 in allowance for bad debts. In 20X4, Ornate wrote off $360 in accounts receivable that appear to be uncollectible. At the end of 20X4, Ornate recorded bad debt expense of $330. What is the balance in the allowance for doubtful accounts at the end of 20X4?

a. $370

b. $730

c. $60

d. $690

5. Gladson Corporation accrues bad debt expense using the percentage of sales method. At the end of the year, Gladson has $450,000 in accounts receivable and $4,000 in its allowance for doubtful accounts before any entry is made for bad debts. Sales for the year were $1,900,000. The percentage that Gladson has historically used to calculate bad debts is 1 percent of sales. Which of the following is true?

a. Gladsons bad debt expense for the year is $500.

b. The percentage of sales method is designed to achieve an accurate balance sheet presentation of the net realizable value of accounts receivable.

c. Gladson would report an allowance for doubtful accounts of $23,000.

d. Gladson would need to make an adjustment because the $4,000 remaining balance in the allowance for doubtful accounts indicates they estimated wrong last year.

5. Darlene Corporation has $300,000 in assets, 30 percent of which are current, and $100,000 in liabilities,40 percent of which are current. Which of the following is true?

a. Darlenes current ratio is 3 to 1. b. Darlenes working capital is $200,000. c. Darlenes working capital is $50,000. d. The current ratio and working capital are measures of a companys profitability.

1. Fifer Inc. began the year with $450,000 in accounts receivable, ended the year with $590,000 in accounts receivable, and $4,000,000 in sales. Last year Fifers age of receivables was forty-six days and its receivables turnover was six times. Which of the following is not true? a. Fifers age of receivables is fifty-four days. b. Fifers receivables turnover is 7.92 times. c. Fifers age of receivables improved this year over last year. d. Analysts monitor the time it takes a company to collect its receivables.