True/False Indicate whether the sentence or statement is true or false. 1 point

Question

True/False

Indicate whether the sentence or statement is true or false. 1 point for each question

____    1.   The completed-contract method was developed to relate recognition of revenue on long-term construction-type contracts to the activities of a firm in fulfilling these contracts.

____    2.   Estimates of architects and engineers of percentage-of-completion are not acceptable under generally accepted accounting principles.

____    3. The use of the direct write-off method is acceptable under generally accepted accounting principles.

____4. The method of estimating uncollectible accounts expense based on the accounts receivable balance emphasizes the determination of the net realizable value of the receivables.

____5. The "list" sales price less any trade discount is the amount at which the receivable and the corresponding revenue should be recorded.

____6. In a bank reconciliation statement, an outstanding check must be subtracted from the bank statement balance in determining the correct cash balance.

____    7.   Accounting for installment sales using the deferred gross profit approach requires determining a gross profit rate for the sales of each year, and establishing an accounts receivable and a deferred revenue account identified by the year of the sale.

____    8.   The deferred gross profit accounts are reported as liabilities under the installment sale method.

____    9.   The cost recovery method is often used when the circumstances surrounding a sale are too uncertain to use the installment sale method.

____            10. In a bank reconciliation statement, the amount of a not-sufficient-funds check must be added to the depositor's cash balance in determining the correct cash balance.

Explanation / Answer

The method of estimating uncollectible accounts expense based on the accounts receivable balance emphasizes the determination of the net realizable value of the receivables.

S.No. True/False Particulars 1 FALSE The completed-contract method was developed to relate recognition of revenue on long-term construction-type contracts to the activities of a firm in fulfilling these contracts. 2 FALSE Estimates of architects and engineers of percentage-of-completion are not acceptable under generally accepted accounting principles 3 FALSE The use of the direct write-off method is acceptable under generally accepted accounting principles 4 FALSE

The method of estimating uncollectible accounts expense based on the accounts receivable balance emphasizes the determination of the net realizable value of the receivables.

5 TRUE The "list" sales price less any trade discount is the amount at which the receivable and the corresponding revenue should be recorded 6 TRUE In a bank reconciliation statement, an outstanding check must be subtracted from the bank statement balance in determining the correct cash balance 7 TRUE Accounting for installment sales using the deferred gross profit approach requires determining a gross profit rate for the sales of each year, and establishing an accounts receivable and a deferred revenue account identified by the year of the sale 8 TRUE The deferred gross profit accounts are reported as liabilities under the installment sale method. 9 TRUE The cost recovery method is often used when the circumstances surrounding a sale are too uncertain to use the installment sale method 10 FALSE In a bank reconciliation statement, the amount of a not-sufficient-funds check must be added to the depositor's cash balance in determining the correct cash balance

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