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Unformatted text preview: 1. The primary users of external financial reports are: b. individuals who have an economic interest in the firm but who are not part of management. ________________________________________ 2. If a company has $15,000 in assets and $10,000 in equities, then liabilities are: c. $5,000. ________________________________________ 3. A revenue account is increased with: b. credits. ________________________________________ 4. A revenue that is collected before it has been earned is called a(n): d. unearned revenue. ________________________________________ 5. Companies that sell stock on the stock exchanges are required to obtain an independent audit of their accounting system and records. This audit must be conducted by a: d. Certified Public Accountant. ________________________________________ 6. Bander Company uses the allowance method to estimate losses from uncollectible accounts. Net sales for the year are $480,000, and the company estimates its bad debts as 1 percent of net sales. If there is already a $2,400 credit balance in Allowance for Bad Debts, how much should be recorded as bad debts expense? b. $4,800 ________________________________________ 7. The entry required to record a sales return by a customer could consist of: b. a debit to Sales Returns and Allowances and a credit to Accounts Receivable....
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- Spring '11