Question 1 Interest is usually associated with bad debts. accounts receivable. doubtful accounts. notes receivable. Question 2 Under the allowance method, writing off an uncollectible account is not acceptable practice. affects both balance sheet and income statement accounts. affects only income statement accounts. affects only balance sheet accounts. Question 3 The existing balance in Allowance for Doubtful Accounts is considered in computing bad debt expense in the direct write-off method. percentage of receivables basis. percentage of sales basis. percentage of receivables and percentage of sales basis. Question 4 Bad Debt Expense is reported on the income statement as part of cost of goods sold. a contra-revenue account. reducing gross profit. an operating expense. Question 5 Engler Company purchases a new delivery truck for $55,000. The sales taxes are $4,000. The logo of the company is painted on the side of the truck for $1,600. The truck license is $160. The truck undergoes safety testing for $290. What does Engler record as the cost of the new truck? $61,050 $60,890 $60,600 $59,000 Question 6 Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets? Salvage value Estimated useful life Cash needed to replace the plant asset Cost Question 7 The book value of an asset is equal to the asset's cost less accumulated depreciation. blue book value relied on by secondary markets. replacement cost of the asset. asset's fair value less its historical cost. Question 8 Depreciation is a process of asset devaluation. cost accumulation. cost allocation. asset valuation.
