Question 1. Cost allocation of an intangible asset is referred to as
amortization.
depreciation.
accretion.
capitalization.
Question 2. Notes or accounts receivables that result from sales transactions are often called
sales receivables.
non-trade receivables.
trade receivables.
merchandise receivables.
Question 3. A note receivable is a negotiable instrument which
eliminates the need for a bad debts allowance.
can be transferred to another party by endorsement.
takes the place of checks in a business firm.
can only be collected by a bank.
Question 4. Each of the following is a feature of internal control except
an extensive marketing plan.
bonding of employees.
separation of duties.
recording of all transactions.
Question 5. The matching rule relates to credit losses by stating that bad debt expense should be recorded
in the same period as allowed for tax purposes.
in the period of the sale.
for an exact amount.
in the period of the loss.
Question 6. A promissory note
is not a formal credit instrument.
may be used to settle an accounts receivable.
has the party to whom the money is due as the maker.
cannot be factored to another party.
Question 7. Allowing only the treasurer to sign checks is an example of
documentation procedures.
separation of duties.
other controls.
establishment of responsibility.
Question 8. Bad Debts Expense is reported on the income statement as
part of cost of goods sold.
an expense subtracted from net sales to determine gross profit.
an operating expense.
a contra revenue account.
Question 9. Short-term notes receivable
have a related allowance account called Allowance for Doubtful Notes Receivable.
are reported at their gross realizable value.
use the same estimations and computations as accounts receivable to determine cash realizable value.
present the same valuation problems as long-term notes receivables.
Question 10. Carpino Company purchased equipment and these costs were incurred:
Cash price
$90,000
Sales taxes
4,500
Insurance during transit
750
Installation and testing
1,500
Total costs
$96,750
What amount should be recorded as the cost of the equipment?
$90,000.
$94,500.
$95,250.
$96,750.