Question

) Indicate whether the following are TRUE or FALSE.

1.	A company had net sales of $545,000 and cost of goods sold of $345,000. Its gross margin equals $890,000.
2.	An accelerated depreciation method creates a larger depreciation charge as the asset comes closer to the end of its useful life.
3.	Units of Production is an accelerated depreciation method.
_____ 4.	The term “depletion” as applied to intangible assets follows the matching principle.
_____5.	Even if the end of an accounting period occurs between the signing of a note payable and its maturity date, the matching principle requires that interest expense not be accrued on a note payable until the note is paid.
_____6.	An estimated liability is a POSSIBLE obligation if a certain event occurs.
_____7.	The estimated realizable accounts receivable is what the company anticipates that it will collect.
_____8.	The term ‘capitalizing a cost’ means charging it to stockholder’s equity.
_____9.	The working capital (current) ratio is an indicator of a company’s liquidity.
_____10.	Accounts Receivable is an example of an intangible asset.
_____11.	Merchandise Inventory would be debited when goods are purchased by a company that uses a periodic inventory system.
_____12.	Accumulated depreciation is an account that appears in the income statement.
_____13.	Sales Discounts is added to the Sales account when computing a company's net sales.
_____14.	If goods are shipped FOB destination, the seller records revenue from the sale when the goods arrive at their destination when the transaction is complete.
_____15.	Plant assets are reported on a balance sheet at their adjusted fair market value through depreciation. .
_____16.	Canceled checks are checks the bank has paid and deducted from the customer's account during the period.
_____17.	The matching principle permits the use of the direct write-off method of accounting for uncollectible accounts when bad debts are very large in relation to a company's other financial statement items such as sales and net income.
_____18.	Deferred income is an example of a revenue account that increases equity.
_____19.	A credit memo on a bank statement is an example of a timing difference.
_____20.	Federal laws prohibit the selling of accounts receivables to factors.

Answer 1

Hi as per HOMEWORKLIB POLICY only 4 sub parts are allowed. However I have answered 6 of them for you. I request you to post others separately. Hope you understand. Thanks. If not this question will be invalid.

S No		Reason
1	FALSE	Gross margin = 545,000-345,000 = 200,000
2	FALSE	An accelerated depreciation method creates a larger depreciation charge as the asset comes closer to the end of its beginning life.
3	FALSE	It depends on the units produced and cannot be concluded
4	TRUE
5	FALSE	Even if the end of an accounting period occurs between the signing of a note payable and its maturity date, the matching principle requires that interest expense be accrued on a note payable until the note is paid.
6	TRUE