16. An accounting procedure that (1) estimates and reports bad debts expense from credit sales during the period of the sales and (2) reports accounts receivable at the amount of cash to be collected is the:

	A. Allowance method of accounting for bad debts.
	B. Aging of notes receivable.
	C. Adjustment method for uncollectible debts.
	D. Direct write-off method of accounting for bad debts.
	E. Cash basis method of accounting for bad debts.

17. A company used the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts:

All sales are made on credit. Based on past experience, the company estimates 0.5% of credit sales to be uncollectible. What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared?

A. $925

B. $1,225

C. $4,200

D. $4,500

E. $45,000

18. 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.
	E. No effect on net income; decrease in total assets.

19. On December 31 of the current year, a company's unadjusted trial balance included the following: Accounts Receivable, debit balance of $103,886; Allowance for Doubtful Accounts, credit balance of $1,454. What amount should be debited to Bad Debts Expense, assuming 5% of outstanding accounts receivable at the end of the current year are considered uncollectible?

A. $1,454

B. $5,194.3

C. $6,648.3

D. $3,740.3

E. $102,432

20. Depreciation:

	A. Measures the decline in market value of an asset.
	B. Measures physical deterioration of an asset.
	C. Is the process of allocating to expense the cost of a plant asset.
	D. Is an outflow of cash from the use of a plant asset.
	E. Is applied to land.

21. A company purchased property for a building site. The costs associated with the property were:

What portion of these costs should be allocated to the cost of the land and what portion should be allocated to the cost of the new building?

A. $175,800 to Land; $18,800 to Building

B. $190,000 to Land; $3,800 to Building

C. $190,800 to Land; $1,000 to Building

D. $192,800 to Land; $0 to Building

E. $193,800 to Land; $0 to Building

22. 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 than one accounting period.
	E. Tangible assets used in the operation of business that have a useful life of less than one accounting period. 23. Accounts payable: A. Are amounts owed to suppliers for products and/or services purchased on credit. B. Are long-term liabilities. C. Are estimated liabilities. D. Do not include specific due dates. E. Must be paid within 30 days. 24. Obligations due to be paid within one year or within the company's operating cycle, whichever is longer, are: A. Current assets. B. Current liabilities. C. Earned revenues. D. Operating cycle liabilities. E. Bills 25. On January 1, 2013, Jacob issues $600,000 of 11%, 15-year bonds at a price of 102