Unit 1 Post test: Payables and Receivables

Front

A company purchases a piece of equipment for $50,000. The company estimates a useful life of 10 years and a salvage value of $5,000. Using straight-line depreciation, what is the depreciation expense each year?

Back

$5,000

Front

Accumulated depreciation is recorded on the balance sheet as ____.

Back

a reduction to the corresponding asset

Front

A company sells machinery for a gain. What impact does this have on the company's net income on the income statement?

Back

It is increased by the sale amount.

Front

In the balance sheet, assets are listed by ____.

Back

the order of liquidity

Front

When is the revenue earned by a company for the sale of goods recognized and recorded?

Back

when the sale is made

Front

Why could increasing sales through zero percent credit for new purchases be a problem for a company? Options: The new customers may not want the products they purchased. They may not have enough cash flow to replenish their inventory. The new customers may tell their friends about the great credit offer. The company's statement of cash flows could appear misleading.

Back

They may not have enough cash flow to replenish their inventory.

Front

How is a $300 on account sale recorded in the Accounts Receivable subsidiary ledger?

Back

as a $300 debit

Front

In the direct write-off method, a company writes off an account _____.

Back

when it determines the account will not be repaid

Front

A credit memorandum results in a(n) _____ in a customer's accounts receivable file.

Back

decrease

Front

A customer purchases materials for $1,200 with payment due in 30 days. After 20 days, $200 worth of the material is returned because it is damaged. What amount is entered in the Debit column of the customer's ledger file?

Back

$1,200