Chapter 4 test questions

Chapter 4 test questions - cause net income for the period...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
1. Solvency refers to the ability of a company to meet its short-term obligations. False 2. Prepaid expenses are usually classified as current assets. True 3. Accounts 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 customers. False 5. If management underestimates the allowance for non-collectible accounts, this will
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: cause net income for the period to be overstated. 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...
View Full Document

Ask a homework question - tutors are online