Financial Accounting

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Author:
Anonymous
ID:
120335
Filename:
Financial Accounting
Updated:
2011-12-02 19:07:24
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Chapter
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test Questions
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  1. A liability rarely is established for product warranties because of uncertainty as to the amount of the liability
    F
  2. Interest on a promissory note is recognizedd when the note is issued
    F
  3. The allowance method of handling bad debts violates the matching principle
    F
  4. The term wages refers to the compensation of employees who are paid at a montly or yearly rate
    F
  5. The amount of property tax payable is usually an estimated liability for a portion of the year
    T
  6. The costs associated with coupons and rebates are usually reflected in contra revenue accounts
    T
  7. Only the unused portion of a line of credit is recognized as liability
    F
  8. Vacation pay is charged properly as an expense in the month in which an expense in the month in which the employer takes a vacation
    F
  9. The account Allowance for Uncollectible Accounts is closed at the end of the accounting period
    F
  10. If the amount of a liability cannot be excatly determined, it should not be recorded
    F
  11. Unearned revenue is an example of a definitely determinable liability
    T
  12. Trade credit arises from wholesale or retail sales
    T
  13. Companies that experience seasonal cycles of business activity need not manage their cash as carefully as companies whose business is not cyclical
    F
  14. Customers with credit balances in their accounts are entitled to a refund if they do not intend to make any future purchase
    T
  15. Having a compensating balance increases a company's liquidity
    F
  16. Because bad debt losses are incurred to generate sales, they should be charged against the sales that they helped generate
    T
  17. They receivable turnover is expresed in terms of dollars
    F
  18. Following a lenient credit-granting policy will probably result in fewer defaults by customers
    F
  19. The direct charge-off method makes no attempt to match bad-debt loses with revenues.
    T

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