5-Chapter 5 Review Questions - BB

5-Chapter 5 Review Questions - BB - d. Liabilities increase...

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Chapter 5 Review Questions Use the following information to answer the next three questions. Echo Company started the year with a $4,600 balance in accounts receivable and a $150 balance in the allowance for doubtful accounts. The company had credit sales of $12,000, collections on accounts receivable of $13,000, and wrote off uncollectible accounts of $200 during the year. The company believes that 2 percent of its credit sales will be uncollectible. 1. The balance in the accounts receivable account at the end of the year would be a. $3,400. b. $3,600. c. $3,250. d. $4,360. 2. The amount of uncollectible accounts expense appearing on the year’s income statement would be a. $532. b. $332. c. $440. d. $240. 3. The net realizable value of receivables at the end of the year would be a. $3,250. b. $3,350. c. $3,210. d. $3,410. 4. Recording the write-off of an uncollectible account will have what effect on the accounting equation? a. Total assets decrease and equity decreases. b. Total assets increase and equity decreases. c. Total assets remain unchanged.
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Unformatted text preview: d. Liabilities increase and equity decreases. 5. ABC Company accepts a credit card in payment for $1,500 of services performed for a cus-tomer. The credit card company charges a 4 percent service fee. Recording the transaction on ABC’s records will a. increase assets by $1,440. b. increase expenses by $60. c. increase revenue by $1,500. d. all of the above. 6. Training Services, Inc. (TSI) recognized accrued interest revenue at the end of its current ac-counting period. The result of this recognition is to a. Increase assets, liabilities, and equity. b. Increase assets and equity with no effect on liabilities. c. Increase assets and liabilities and decrease equity. d. Increase cash flow from operating activities. 5-1 *Use your book to fill in any gaps not covered during the lecture for Chapter 5. You are responsible for any material in the book as well as lecture material. Solutions to Review Questions Question Answer 1 A 2 D 3 C 4 C 5 D 6 B 5-2...
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This note was uploaded on 02/10/2011 for the course ACC 201 taught by Professor Cromartie during the Spring '11 term at UNC Greensboro.

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5-Chapter 5 Review Questions - BB - d. Liabilities increase...

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