Answer the following statements true (T) or false (F)
1) The direct write-off method for uncollectible accounts violates the matching principle.
2) The use of the allowance method to record bad debts expense violates the matching principle.
3) A method of accounting for uncollectible receivables in which the company estimates bad debts expense instead of waiting to see from which customers the company will not be able to collect is known as the allowance method.
4) Under both the allowance method and the direct-write off method of accounting for uncollectible accounts, the amount of bad debts expense is estimated at the end of each accounting period.
5) The Allowance for Bad Debts is a contra account to Accounts Receivable.
1) TRUE
2) FALSE - The use of the allowance method to record bad debts expense is based on the matching principle.
3) TRUE
4) FALSE
5) TRUE
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Which of the following is required to be disclosed, pursuant to GAAP?
A) operating income or loss from discontinued component reported on the income statement B) a description of facts and circumstances leading up to the sale of a discontinued component within the notes of the financial statements C) all gains or losses from sale of the component reported on the income statement or in the footnotes D) All of these answer choices are correct.
The party borrowing money is usually called a ________
A) creditor B) mortgagee C) debtor D) beneficiary
To bid on a job, RoadCrew Construction Company relies on the oral promise of Surface Paving, Inc, to perform certain work at a certain price. Smooth Paving fails to per¬form. RoadCrew Construction can
a. not recover due to the principle of freedom of contract. b. not recover due to the Statute of Frauds. c. recover under the concept of unconscionability. d. recover under the doctrine of promissory estoppel.
Which of the following is most correct with regard to Management's Discussion and Analysis (MD&A)?
A. State and local governments are required to provide an MD&A. B. Both state and local governments and federal agencies are required to provide an MD&A. C. Federal agency financial reports are required to provide an MD&A. D. Both state and local governments and federal agencies are encouraged, but not required to provide an MD&A.