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Which statement is false ? Bad debts

Which statement is false ? Bad debts. Are estimated in the period in which sales are recognized to properly match revenue and expenses are shown on the income statement as An expense of generating sales; a certain amount is expected

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Which statement is false ? Bad debts

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  1. Which statement is false? Bad debts • Are estimated in the period in which sales are recognized to properly match revenue and expenses • are shown on the income statement as An expense of generating sales; a certain amount is expected • are shown on the income statement as a loss because they are avoidable with proper procedures • May be recognized using either the % of sales or the aging of accounts method

  2. X Company uses the allowance method; it writes off an account. Which of the following is true? • Stockholders’ equity remains the same • Total assets remain the same • Total expenses remain the same • None of the above • All of the above

  3. Which of the following is not an acceptable method of dealing with bad debts? • The allowance method • The percentage of credit sales method • The direct write-off method • The ageing of accounts method

  4. A sales discount is • A reduction in price to increase sales • A reduction in price to encourage quick payment • Disguised interest • Both (B) and (C)

  5. X Co. sells equipment A for 6 annual payments of $ 12,000. How much sales revenue should X Co. recognize, if X Co. wants to earn 8%? (end of year payments)

  6. X Co. sells equipment B with a Fair market value of $ 53,200 for 4 annual payments of $ 15,000. A. How much sales revenue should X Co. recognize? B. What is X Co. required rate of return?

  7. X Co. sells equipment C in exchange for one payment of $50,000 to be received in three years. How much sales revenue should X Co. recognize, if it wants to earn 6%?

  8. X Co. sells equipment D in exchange for one payment of $50,000 plus 2% interest on the outstanding balance. The total (principal and interest are due in two years. A. How much sales revenue should X Co. recognize, if it wants to earn 8%?B. Record interest income for year 1C. Record interest income for year 2

  9. Exercise 15:How much cash is received from factored accounts?

  10. Exercise 17:A. How much cash is received from factored accounts?B. What is the loss from sale of receivablesC. How much is due from factor?

  11. C E C D $55,475 A: $53,200 B: 5% $41,981 A. $44,599 $3,567 $3,853 $160,000 A. $283,500 $4,500 $12,000 Answers:

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