Quiz 2 #3.pdf - School of Accounting UNSW Business School...

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Site Home Announcements User Guides School of Accounting UNSW Business School Jonathan Lam UNSWA ­ University of New South Wales CO… AC… ACCT1501­5164_00002 Online Quizzes Online Quiz 2 Question 1 The balance in the Allowance for Doubtful Debts account represents: Select one: Correct Mark 1.00 out of 1.00 Started on Thursday, 5 May 2016, 1:26 PM State Finished Completed on Thursday, 5 May 2016, 2:22 PM Time taken 56 mins 3 secs Grade 19.00 out of 20.00 ( 95 %) a. bad debts written off in the current accounting period b. liquid funds available to meet losses arising from customers becoming insolvent c. an amount that is deducted from the Accounts Receivable account to reduce it to the estimated realisable value See textbook for definition, but the Answer is C. Under the indirect method, an adjustment is made at the end of each accounting period to estimate bad debts based on business activity from the accounting period. Thus, A is not the answer as allowance for doubtful debt estimates likely bad debts (but we have not yet written off the accounts yet). Neither is it B, which is off­topic, nor D, because at the point of using the indirect method, a business is merely making concessions for uncollectible amount but has yet deemed them to be uncollectible.
d. bad debts written off as Accounts Receivable considered uncollectable The correct answer is: an amount that is deducted from the Accounts Receivable account to reduce it to the estimated realisable value
Question 2 Griffin Ltd made a sale of $800 to a customer on terms of 2.5/10, n/30 on 1 July. The account was paid on 8 July. Griffin Ltd would make which of the following postings to the ledger on 8 July? Select one: Correct Mark 1.00 out of 1.00
Question 3 On 1 May 2012, A Ltd pays $9600 for a one­year fire insurance policy that expires on 30 April 2013. Which of the following will appear on A Ltd's balance sheet at 30 June 2012? Select one: Correct Mark 1.00 out of 1.00
c. prepaid insurance $9600 d. prepaid insurance $8800. The correct answer is: prepaid insurance $8000

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