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31 short term investments in marketable securities may not be reported in the balanc 4295417

 

 

31.Short-term investments in marketable securities may not be reported in the balance sheet at values higher than original cost. 
 
 

 

 

 

32.Effective internal control over receivables is designed to ensure that customers' payments are promptly deposited. 
 
 

 

 

 

33.One of the major steps in achieving internal control over accounts receivable is that the Billing department reviews the sales order, the customer's credit file, and decides whether and how much credit should be extended. 
 
 

 

 

 

34.In order to maximize sales and profits, effective internal control over receivables ensures that credit is extended to all customers who request credit. 
 
 

 

 

 

35.To “write-off” an account receivable is to reduce the balance of the customer's account to zero. 
 
 

 

 

 

36.The direct write-off method is more conservative than the allowance method for valuation of receivables. 
 
 

 

 

 

37.An account receivable that arose from normal sales activity has a 16-month credit term. This receivable will be classified as a noncurrent asset. 
 
 

 

 

 

38.If the allowance method is used, the recovery of an account receivable previously written-off results in a gain being recorded on the income statement. 
 
 

 

 

 

39.The income statement approach used to estimate uncollectible receivables uses a percentage of net sales without considering the current balance in the Allowance account. 
 
 

 

 

 

40.The Allowance for Doubtful Accounts is called a valuation account, or contra-asset account, and normally has a credit balance. 
 
 

 

 

 

 

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