Two bases for estimating uncollectible accounts are Law Assignment Help

Two bases for estimating uncollectible accounts are:percentage of current assets and percentage of sales.percentage of receivables and percentage of sales.percentage of assets and percentage of sales.percentage of receivables and percentage of total revenue. Using the percentage of receivables method for recording bad debtsexpense, estimated uncollectible accounts are $25,000. If thebalance of the Allowance for Doubtful Accounts is $8,000 debitbefore adjustment, what is the amount of bad debts expense for thatperiod?$33,000$17,000$25,000$8,000 The sale of receivables by a businessis an indication that the business is owned by a factor.is generally the major revenue item on its income statement.can be a quick way to generate cash for operating needs.indicates that the business is in financial difficulty. A company regularly sells its receivables to a factor who assessesa 2% service charge on the amount of receivables purchased. Whichof the following statements is true for the seller of thereceivables?The other expense section of the income statement will increaseeach time accounts are sold.The credit to Accounts Receivable is less than the debit to Cashwhen the accounts are sold.Selling expenses will increase each time accounts are sold.The loss section of the income statement will increase each timereceivables are sold. The interest on a $2,000, 6%, 90-day note receivable is$60.$30.$90.$120. A note receivable is a negotiable instrument whichtakes the place of checks in a business firm.eliminates the need for a bad debts allowance.can be transferred to another party by endorsement.can only be collected by a bank. When a note is accepted to settle an open account, Notes Receivableis debited for the notesnet realizable value.face value plus interest.maturity value.face value. Which of the following are also called trade receivables?Other receivablesAdvances to employeesIncome taxes refundableAccounts receivable A company purchases a remote site building for computer operations.The building will be suitable for operations after someexpenditures. The wiring must be replaced to computerspecifications. The roof is leaky and must be replaced. All roomsmust be repainted and recarpeted and there will also be someplumbing work done. Which of the following statements is true?The cost of the building will not include the repainting andrecarpeting costs.The cost of the building will include the cost of replacing theroof.The cost of the building is the purchase price of the building,while the additional expenditures are all capitalized as BuildingImprovements.The wiring is part of the computer costs, not the buildingcost. All of the following factors in computing depreciation areestimates exceptuseful life.cost.residual value.salvage value. Accountants do not attempt to measure the change in a plant assetsmarket value during ownership becausethe assets are not held for resale.plant assets cannot be sold.losses would have to be recognized.it is managements responsibility to determine fair values. In computing depreciation, salvage value issubtracted from accumulated depreciation to determine the plantassets depreciable cost.ignored in all the depreciation methods.the fair market value of a plant asset on the date ofacquisition.an estimate of a plant assets value at the end of its usefullife. Useful life is expressed in terms of use expected from the assetunder thedeclining-balance method.straight-line method.units-of-activity method.none of these. Management should select the depreciation method thathas been used most often in the past by the company.is easiest to apply.best measures the plant assets market value over its usefullife.best measures the plant assets contribution to revenue over itsuseful life. A change in the estimated useful life of equipment requiresthat income for the current year be increased.a retroactive change in the amount of periodic depreciationrecognized in previous years.that no change be made in the periodic depreciation so thatdepreciation amounts are comparable over the life of the asset.that the amount of periodic depreciation be changed in the currentyear and in future years. Additions and improvementstypically only benefit the current accounting period.occur frequently during the ownership of a plant asset.increase the book value of plant assets when incurred.normally involve immaterial expenditures. If a plant asset is retired before it is fully depreciated, and nosalvage or scrap value is received,a gain on disposal will be recorded.a loss on disposal will be recorded.phantom depreciation must be taken as though the asset were stillon the books.no gain or loss on disposal will be recorded. On a balance sheet, natural resources may be described morespecifically as all of the following exceptoil reserves.land improvements.mineral deposits.timberlands. A patent shouldbe amortized over its useful life or 20 years, whichever islonger.not be amortized if it has an indefinite life.be amortized over a period of 20 years.be amortized over its useful life or 20 years, whichever isshorter. The balance in accumulated depreciation isdeducted from plant and equipment on the balance sheet.generally not reported in the financial statements.deducted from intangible assets on the balance sheet.deducted from retained earnings in the stockholders equity sectionof the balance sheet. A gain on sale of a plant asset occurs when the proceeds of thesale are greater than thebook value of the asset sold.market value of the asset sold.salvage value of the asset sold.accumulated depreciation on the asset sold. A purchased patent has a legal life of 20 years. It should beamortized over 20 years regardless of its useful life.amortized over its useful life if less than 20 years.expensed in the year of acquisition.not amortized. A truck was purchased for $120,000 and it was estimated to have a$24,000 salvage value at the end of its useful life. Monthlydepreciation expense of $2,000 was recorded using the straight-linemethod. The annual depreciation rate is8%.2%.25%.20%.

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