True or false:
1.Using the allowance method of accounting for uncollectible receivables requires an estimate of the amount of receivables that will not be collected.
2. When a company receives payment from a customer whose account was previously written off, the customer’s account should be reinstated.
3. Accepting credit cards through a large bank, rather than offering credit directly to customers can help a business reduce its costs.
4. When a customer’s account, previously written off as uncollectible, is reinstated, the net realizable value of Accounts Receivables increases.
5. The specific identification inventory method is not practical for companies that sell many low-priced, high turnover items.
6. The inventory cost flow method a company chooses affects both the income statement and the balance sheet.
7. A company’s gross margin reported on the income statement is not affected by the inventory cost flow method it uses.
8. A line of credit typically has an interest rate that is fixed (constant) for the length of the agreement
9. Vacation pay and sick leave are examples of contingent liabilities that a company generally should recognize on its financial statements.
10. For a long-term note payable, repaying a portion of principal along with interest payments is called loan amortization.
11. If a company determines that the likelihood of a future obligation arising from a contingent liability is possible but cannot estimate a cost, the company must record a liability on its balance sheet statement
12. If a company’s operating cycle is 90 days long, the company would use a period of one year to identify current assets and liabilities
13. Interest and notes receivable are reported on the balance sheet in the order of liquidity.