Accounting 2 Semester 1 Review| 53 questions| with complete solutions
allowance method correct answer: crediting the estimated value of uncollectible
... [Show More] accounts to a contra account
book value of accounts receivable correct answer: the difference between the balance of accounts receivable and its contra account, allowance for uncollectible accounts
book value correct answer: the difference between an asset's account balance and its related contra account
net realizable value correct answer: the amount of accounts receivable a business expects to collect
percent of sales method correct answer: a method used to estimate uncollectible accounts receivable that assumes a percent of credit sales will become uncollectible
percent of accounts receivable method correct answer: a method that uses an analysis of accounts receivable to estimate the amount that will be uncollectible
aging of account receivable correct answer: analyzing accounts receivable according to when they are due
writing off an account correct answer: canceling a balance of a customer account because the customer does not pay
promissory note correct answer: a written and signed promise to pay a sum of money at a specified time
note payable correct answer: a promissory note signed by a business and given to a creditor
note receivable correct answer: a promissory note that a business accepts from a customer
maker of a note correct answer: the person or business that signs a note and thus promises to make payment
payee correct answer: the person or business to whom the amount of a note is payable
principal correct answer: the original amount of a note, sometimes referred to as the face amount
interest rate correct answer: the percentage of the principal that is due for the use of the funds secured by a note
maturity date correct answer: the date on which the principal of a note is due to be repaid
time of a note correct answer: the length of time from the signing date of a note to the maturity date
maturity value correct answer: the amount that is due on the maturity date of a note
interest income correct answer: the interest earned on money loaned
dishonored note correct answer: a note that is not paid when due
false correct answer: total assets are reduced when a business accepts a note receivable from a customer needing an extension of time to pay an account receivable
true correct answer: the accounting concept Neutrality is applied when the process of making accounting estimates is free from bias
true correct answer: a business having a 400 debit balance in allowance for uncollectible accounts and estimating its uncollectible accounts aging to be 5000 would record a 5400 credit to allowance for uncollectible accounts
false correct answer: the direct write off method complies with generally accepted accounting principles
false correct answer: the direct write off method matches the expense of uncollectible accounts to the revenue that is earned in the same period
false correct answer: annual straight line depreciation expense of plant assets is calculated as the original cost of the plant divided by the years of estimated useful life
false correct answer: estimated federal income tax must be paid in monthly installments
true correct answer: all accounts are listed on the unadjusted trial balance regardless of whether there is a balance or not
true correct answer: functional depreciation should be considered in estimating the useful life of computer equipment
true correct answer: the value of insurance coverage is recorded as a debit to insurance expense
true correct answer: the book value of a plant asset is its original cost minus accumulated depreciation
false correct answer: for a business using the periodic inventory method the balance of merchandise inventory in the unadjusted trial balance represents the beginning balance plus all purchases of mrechandise made in the fiscal period [Show Less]