Reference no: EM132484774

Question 1: Which of the following best represents the matching principle criteria?

Option 1: Revenue is recognized when an order occurs and not when the actual sale is initiated.

Option 2: Expenses are reported in the period in which they were incurred.

Option 3: Revenue and expenses are matched based on when expenses are paid.

Option 4: Expenses may be reported in a different period than the matching revenues.

Question 2: A car dealership sells a car to a customer for $35,000. The customer makes a 10% down payment, and the dealership finances the remaining 90% in-house. How much will the car dealership record in Accounts Receivable for this customer?

Option 1: $8,750

Option 2: $7,000

Option 3: $31,500

Option 4: $19,250

Question 3: Doer Company reports year-end credit sales in the amount of $390,000 and accounts receivable of $85,500. Doer uses the income statement method to report bad debt estimation. The estimation percentage is 3.5%. What is the estimated balance uncollectible using the income statement method?

Option 1: $13,650

Option 2: $2,992.50

Option 3: $136,500

Option 4: $29,925

Question 4: Conner Pride reports year-end credit sales in the amount of $567,000 and accounts receivable of $134,000. Conner uses the balance sheet method to report bad debt estimation. The estimation percentage is 4.6%. What is the estimated balance uncollectible using the balance sheet method?

Option 1: $61,640

Option 2: $6,164

Option 3: $26,082

Option 4: $260,820

Question 5: Which of the following estimation methods considers the amount of time past due when computing bad debt?

Option 1: balance sheet method

Option 2: direct write-off method

Option 3: balance sheet aging of receivables method

Option 4: income statement method

Question 6: South Rims has an accounts receivable balance at the end of 2018 of $357,470. The net credit sales for the year are $769,346. The balance at the end of 2017 was $325,300. What is the accounts receivable turnover rate for 2018 (rounded to two decimal places)?

Option 1: 1.13 times

Option 2: 2.02 times

Option 3: 2.15 times

Option 4: 2.25 times

Question 7: Ancient Grains Unlimited has an accounts receivable turnover ratio of 3.34 times. The net credit sales for the year are $567,920. What is the days' sales in receivables ratio for 2018 (rounded to the nearest whole number)?

Option 1: 110 days

Option 2: 109 days

Option 3: 190 days

Option 4: 101 days

Question 8: Which of the following is true about earnings management?

Option 1: It works within the constraints of GAAP.

Option 2: Both A and C

Option 3: Both B and C

Option 4: It works outside the constraints of GAAP.

Option 5: It tries to improve stakeholder's views of the company's financial position.

Question 9: Michelle Company reports $345,000 in credit sales and $267,500 in accounts receivable at the end of 2019. Michelle currently uses the income statement method to record bad debt estimation at 4%. To manage earnings more efficiently, Michelle changes bed debt estimation to the balance sheet method at 4%. How much is the difference in net income between the income statement and balance sheet methods?

Option 1: $77,500

Option 2: $10,700

Option 3: $3,100

Option 4: $13,800

Question 10: Mark Industries issues a note in the amount of $45,000 on August 1, 2018 in exchange for the sale of merchandise. Which of the following is the correct journal entry fo this sale?

A. Cash $45,000

Sales Revenue $45,000

B. Cash $45,000

Notes Receivable: Mark $45,000

C. Accounts Receivable: Mark $45,000

Sales Revenue $45,000

D. Notes Receivable: Mark $45,000

Sales Revenue $45,000

Option 1: B

Option 2: A

Option 3: C

Option 4: D

Question 11: A company collects an honored note with a maturity date of 24 months from the establishment, a 10% interest rate, and an initial loan amount of $30,000. Which accounts are used to record collection of the honored note at maturity date?

Option 1: interest revenue, interest expense, cash

Option 2: notes receivable, interest revenue, cash, interest expense

Option 3: interest revenue, interest receivable, cash, notes receivable

Option 4: interest receivable, cash, notes receivable

Question 1: What is the matching principle?