Reference no: EM132429507

Questions -

Q1) Smith & Sons uses the allowance method of recording credit losses. The company wrote off one customer's account in the amount of $1,000 that was subsequently collected. The company reinstated the account and then recorded the collection. What is the result of these procedures?

Decrease total assets by $1,000.

There is no effect on total assets.

Increase total assets by $1,000.

Decrease total assets by $2,000.

Q2) Smith & Sons received a six month note from a customer. The note had a face amount of $5,000 and carried an interest rate of nine percent. What is the total amount of interest to be received?

$225

$675

$450

The amount cannot be determined from the given information.

Q3) The direct write-off method is not generally accepted because it violates which of the following accounting principles or concepts?

The entity principle

The matching principle

The conservatism concept

The materiality concept