Reference no: EM132794714

Problem 1: Which among the statements is not correct?

a. Net realizable value of accounts receivable (A/R) results when A/R is reduced by allowance for doubtful accounts

b. Credit balances in A/R arising from customer's advances should be excluded from A/R.

c. The allowance method of recording bad debt loss is the one consistent with accrual accounting.

d. none of the above

Problem 2: The interest on a non-interest bearing note is equal to

a. zero

b. excess of market value over present value of note

c. excess of present value over face value of note

d. excess of face value over present value of note

e. answer not given

Problem 3: If a note receivable is discounted with recourse, which will not be true?

a. a contingent liability exists

b. note receivable discounted will be credited

c. liability for note receivable discounted will be credited

d. note receivable will be credited upon settlement of note

e. none of the above