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test 2 quiz two - this will cause net income for the period...

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TEST 2, Quiz 2 1. Solvency refers to the ability of a company to meet its short-term obligation FALSE 2. Prepaid expenses are usually classified as current assets TRUE 3. Account receivable are usually not classified as a current asset FALSE 4. The cash operating cycle is the amount of days between making a sale and collecting money from a customer False 5. If management underestimates the allowance for non-collectible accounts
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Unformatted text preview: this will cause net income for the period to be over-stated TRUE 6. Forming a special purpose entity (SPE) is a common way companies securitize receivables TRUE 7. If a company factors its accounts receivables this will have the effect of making its cash cycle appear shorter TRUE 8. Under GAAP the choice of inventory costing method (LIFO,FIFO, etc) must be determined by the physical flow of the goods FALSE...
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