Match the descriptions below with the correct answer, using the letter codes shown in the table below. (8 points) A. Realizable value B. Percentage of receivables method C. 1/10, n/60 D. Bad debt Expense E. Aging of receivables F. Direct write-off method G. Operating cycle H. Specific identification method I. FOB shipping point J. Time period assumption K. n/10 EOM
L. Percentage of sales method
M. Permanent accounts N. 2/10, EOM
O. 2/10, n/30 P. FOB destination
The economic life of a business should be divided into Answer 1 Shipping terms that would typically mean that the buyer has to pay the freight charges Answer 2 would result in a $100 discount for early payment of a $10,000 purchase Answer 3 Accounts whose balances are carried forward to the next period Answer 4 Credit terms that allow for a 2% discount if paid within the first 10 days from the purchase date. Answer 5 A method used to approximate uncollectible accounts which results in better matching of expenses and revenues Answer 6 The average time that it takes to go from cash to cash in producing revenues. Answer 7 Analysis of customer account balances by length of time they have been unpaid.
Answer 1 Shipping terms that would typically mean that the buyer has to pay the freight charges = I. FOB shipping point
Answer 2 would result in a $100 discount for early payment of a $10,000 purchase = C. 1/10, n/60
Answer 3 Accounts whose balances are carried forward to the next period = M. Permanent accounts
Answer 4 Credit terms that allow for a 2% discount if paid within the first 10 days from the purchase date. = O. 2/10, n/30
Answer 5 A method used to approximate uncollectible accounts which results in better matching of expenses and revenues = F. Direct write-off method
Answer 6 The average time that it takes to go from cash to cash in producing revenues. = G. Operating cycle
Answer 7 Analysis of customer account balances by length of time they have been unpaid. = E. Aging of receivables
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