ACCT 201A: INTERMEDIATE ACCOUNTING (5 UNITS)
DIVISION OF BUSINESS, COMPUTER INFORMATION SYSTEMS AND ECONOMIC WORKFORCE
FALL SEMESTER 2016 CRN 10728
TUESDAY 7:00 9:30 P.M. ROOM 326
General-purpose financial statements are the product of
a. financial accounting.
b. managerial accounting.
c. both financial and managerial accounting.
d. neither financial nor managerial accounting.
Ans: a, LO: 1, Bloom: K, Difficulty: Easy,
Sale of Receivables
Crest Textiles, Inc. factors $500,000 of accounts receivable with Commercial Factors, Inc. Commercial Factors assesses a
finance charge of 3 percent of the amount of accounts receivable and retains an amount equal to 5 percent of the
Type of Exchange
Exchange has commercial substance
Exchange lacks commercial substance no cash received
Exchange lacks commercial substance cash received
Recognize partial gain
Assume a company borrowed $200,000 at 12% interest from State Bank on Jan. 1, 2014, for specific purposes
of constructing special-purposes equipment to be used in its operations. Construction on the equipment began
on Jan. 1, 2014
Illustration 1 3-16
Working capital Current assets Current liabilities
Current ratio .
Cash provided by operations
Average current liabilities
Cost of goods sold
Quiz Chapter 7
1. Why is the allowance method preferred over the direct write-off method of accounting for bad debts?
Allowance method is used for tax purposes.
Estimates are used.
Determining worthless accounts under dir