8. Annabeth, Inc. had net sales of $1,530,000 during 2016. On January 1, 2016, A

Question

8. Annabeth, Inc. had net sales of $1,530,000 during 2016. On January 1, 2016, Annabeth's accounts receivable was $320,000. On December 31, 2016. Annabeth's accounts receivable was $400,000. What was Annabeth's accounts receivable turnover for 2016? A) 4.25 B) 3.03 C) 3.83 D) 4.78 9. Annabeth, Inc. had net sales of $1,530,000 during 2016. On January 1, 2016, Annabeth's accounts receivable was $320,000. On December 31, 2016, Annabeth's accounts receivable was $400,000. What was Annabeth's average collection period for 2016? A) 85.9 days B) 15.5 days C) 95.4 days D) 43.0 days 10. The materiality principle: A) States that an amount can be ignored if its effect on financial statements is unimportant to the user's business decisions B) Requires use of the allowance method for bad debts C) Requires use of the direct write-off method D) States that bad debts not be written off 11. On October 29 of the current year, a company concluded that a customer's $4,400 account receivable was uncollectible and that the account should be written off. What effect will this write-off have on this company's net income and total assets assuming the allowance method is used to account for bad debts? A) Decrease in net income; no effect on total assets B) No effect on net income; no effect on total assets C) Decrease in net income; decrease in total assets D) Increase in net income; no effect on total assets Plant assets are A) Tangible assets used in the operation of a business that have a useful life of more than one accounting period B) Current assets C) Held for sale D) Intangible assets used in the operations of a business that have a useful life of more 12. than one accounting period

Explanation / Answer

Requirement 10:

Material is the principle which specifies that the importance should be given to the information which affects the users' decision making .

Hence Correct Option is

A) States that an amount can be ignored if its effect on financial statements is unimportant to user's business decisions.

Requirement 11:

If uncollectible amount is written off using allowance method,

First, Bad debt (Profit & Loss) is debited and allowance for doubtful accountd is credited, and

then allowance for doubtful accounts should be debited and accounts receivable should be credited.

Hence there will be Decrease in net income and there will be decrease in total assets.

Correct Option is C) Decrease in Net Income and decrease in total assets

Requirement 8: A Net Sales 1530000 B Beginning Accounts Receivable 320000 C Ending Accounts Receivable 400000 D Average Accounts Receivable ((B+C)/2) 360000 E Accounts Receivable Turnover (A/D) 4.25 Correct Option is A) 4.25 Requirement 9: A Net Sales 1530000 B Beginning Accounts Receivable 320000 C Ending Accounts Receivable 400000 D Average Accounts Receivable ((B+C)/2) 360000 E Accounts Receivable Turnover (A/D) 4.25 F Number of days in a year 365 G Average Collection Period (F/E) 85.88235294 Correct Option is A) 85.9 days

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