Statement 1: The direct write-off method of bad debts requires a journal entry when the receivables become doubtful of collection. Statement 2: An aging of accounts receivable uses the income statement approach in estimating bad debts expense. a. Only Statement 1 is true b. Only Statement 2 is true c. Both Statement 1 and Statement 2 are true d. Both Statement 1 and Statement 2 are false Statement 1: When cash is received in lieu of stock dividends, there may be a gain on sale of the financial asset. Statement 2: When dividends were distributed using stocks from another corporation, it is appropriately called as a property dividend. a. Only Statement 1 is true b. Only Statement 2 is true c. Both Statement 1 and Statement 2 are true d. Both Statement 1 and Statement 2 are false Statement 1: A share split increases the number, par value, and market value of the shares. Statement 2: From the point of view of the investor, the redemption of the shares is considered an impairment of the investment. a. Only Statement 1 is true b. Only Statement 2 is true c. Both Statement 1 and Statement 2 are true d. Both Statement 1 and Statement 2 are false
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Statement 1: The direct write-off method of
a. Only Statement 1 is true
b. Only Statement 2 is true
c. Both Statement 1 and Statement 2 are true
d. Both Statement 1 and Statement 2 are false
Statement 1: When cash is received in lieu of stock dividends, there may be a gain on sale of the financial asset. Statement 2: When dividends were distributed using stocks from another corporation, it is appropriately called as a property dividend.
a. Only Statement 1 is true
b. Only Statement 2 is true
c. Both Statement 1 and Statement 2 are true
d. Both Statement 1 and Statement 2 are false
Statement 1: A share split increases the number, par value, and market value of the shares. Statement 2: From the point of view of the investor, the redemption of the shares is considered an impairment of the investment.
a. Only Statement 1 is true
b. Only Statement 2 is true
c. Both Statement 1 and Statement 2 are true
d. Both Statement 1 and Statement 2 are false
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