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Hi! I'm working on a study guide. Can anyone help me with the following?

Hi! I'm working on a study guide. Can anyone help me with the following?


Firms that are temporarily short of cash and unable to borrow from usual sources can convert accounts receivable into cash by selling accounts receivable to a bank or financing company. This is called...

A. assigning accounts receivable

B. pledging accounts receivable

C. factoring accounts receivable

D. transferring accounts receivable

E. none of the above


Under the _____ procedure, the firm estimates and recognizes its bad debt expense and increases the balance in the Allowance for Uncollectibles. Under the _____ procedure, the firm estimates the ending balance in the Allowance for Uncollectibles account and makes an entry to bring the balance to this amount; this amount is recorded as Bad Debt Expense. Fill in the blanks

A. aging; percentage-of-sales

B. percentage-of-sales; aging

C. percentage-of-sales; direct charge-off

D. direct charge-off; percentage-of-sales

E. percentage-of-sales; indirect charge-off



U.S. GAAP does not allow sellers of merchandise to recognize revenue from sales when the customers have the right to return goods...

A.

unless the firm can reasonably estimate the amount of returns

B.

unless the firm uses an allowance method to do so

C.

unless the firm can reasonably estimate the amount of returns and uses an allowance method to do so

D.

none of the above

E.

all of the above


Which of the following is false with regard to the cost recovery method?

A.

It matches the costs of generating revenue with cash receipts until the seller recovers all its costs.

B.

It is a method by which the seller sets expenses equal to revenue in each period until it recovers all its costs.

C.

It is a method by which the seller does not recognize gross margin in income until it has recovered all of the costs of the sale.

D.

It is a method by which the seller reports revenue without any matching expenses in its income statement before cumulative cash receipts equal total costs .

E.

None of the above

The direct write-off method...

A.

recognizes losses from uncollectible accounts in the period when a firm decides that specific customers' accounts are uncollectible

B.

does not usually recognize the loss from uncollectible accounts in the period in which the sale occurs and the firm recognizes revenue

C.

provides firms with an opportunity to manage earnings each period by deciding when particular customers' accounts become uncollectible

D.

all of the above

E.

none of the above

The seller of merchandise (on credit) often offers a reduction from the invoice price for prompt payment, this is called a...

A.

sales discount

B.

purchase allowance

C.

incentive discount

D.

prompt payment discount

E.

all of the above

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