1.Capital intensive companies have a relatively large amount invested in assets
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Question
1.Capital intensive companies have a relatively large amount invested in assets to generate a given level of sales. 2.Plant assets are used in operations and have useful lives that extend over more than one accounting period. 3.When using the allowance method of accounting for uncollectible accounts, the entry to record the bad debts expense is a debit to Bad Debts Expense and a credit to Accounts Receivable. 4.Credit sales are recorded by crediting an Accounts Receivable. 5.A high accounts receivable turnover in comparison with competitors suggests that the firm should tighten its credit policy. 6.Under the allowance method of accounting for uncollectible accounts receivable, no attempt is made to estimate bad debts expense. 7.The formula for computing interest on a note is principal of the note times the annual interest rate times time expressed in fraction of year. 8.Total asset cost plus depreciation expense equals book value. 9.The person that borrows money and signs a promissory note is called the payee. 10.A plant asset's useful life might not be the same as its productive life. 11.Land is not subject to depreciation because it has an unlimited life. This means that items which increase the usefulness of the land such as parking lots are not depreciated. 12.The accounts receivable turnover indicates how often accounts receivable are received and collected during the period. 13.The Modified Accelerated Cost Recovery System (MACRS) is part of the U.S. federal income tax laws and is used for tax reporting. 14.Accounts receivable occur from credit sales to customers. 15.The cost of fees for insuring the title and any accrued property taxes are included in the cost of land. 16.The maturity date of a note refers to the date the note must be repaid. 17.Total depreciation expense over an asset's useful life will be identical under all methods of depreciation. 18.An accelerated depreciation method yields smaller depreciation expense in the early years of an asset's life and larger depreciation expense in later years. 19.The direct write-off method of accounting for bad debts records the loss from an uncollectible account receivable when it is determined to be uncollectible. 20.Companies can report credit card expense as a discount deducted from sales or as a selling expense.Explanation / Answer
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