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"Allowance for Doubtful Accounts" is a(n)

Question 13 options:

	a) expense account.
	b) contributed surplus account
	c) liability account.
	d) current asset

Crest Textiles factors $600,000 of accounts receivable with Commercial Factors on a without recourse basis. The receivable records are transferred to Commercial which takes over responsibility for the collections. Commercial assesses a finance charge of 3% of the amount of accounts receivable and withholds an initial amount equal to 6% of the accounts receivable for returns and allowances. How much cash will Crest Textiles receive with regards to this transaction?

Question 14 options:

	a) $546,000
	b) $564,000
	c) $582,000
	d) $600,000

An investment in an entity's debt instruments makes that investor a(n)

Question 15 options:

	a) owner of the issuing entity.
	b) creditor of the issuing entity.
	c) parent company of the issuing entity.
	d) subsidiary of the issuing entity.

Which is true regarding zero interest bearing notes?

Question 20 options:

	a) the note does not need to be recorded
	b) the issuer will never be paid
	c) the effective interest method of amortization should be used with a rate of 100%
	d) an implicit rate should be considered to determine the present value

Which of the following is NOT correct regarding factoring of receivables?

Question 22 options:

	a) factoring usually involves a sale to only one company.
	b) the fees are relatively high.
	c) the quality of receivables may be lower.
	d) the seller usually continues to service the receivables.

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