QUESTION: 1509

An acceptable method for recognizing profit when the collection of cash is in doubt is the ________.

installment method
percentage-of-completion method
consignment method
production method
completed-contract method

Answer(s): A

Explanation:

Revenue is recognized when the conditions of "realized" or "realizable" and earned are met. If the collectibility of assets to be received for products or services is in doubt, revenues may be recognized when cash is received, as in the installment method.

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QUESTION: 1510

Use the following financial data on Enterprise:

Sale of equipment$32,000
Loss on equipment sale$9,000
Dividends paid$12,500
Purchase of an office suite$104,000
Common stock repurchase$45,000
Dividends received from investments$8,500
Interest received on Treasury bonds$1,200
Supplier accounts paid$3,700
Cash collection from customers$14,200
Ending cash balance$98,000
In the above question, the investing cash flow is ________.
-$145,000
-$72,000
$12,000
N. -$136,000

Answer(s): B

Explanation:

Items a and d are the investing cash flows. Note that item b is a non-cash event.

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QUESTION: 1511

All of the following are sources of creditor financing except:

banks
accounts payable.
employees who receive pay in arrears.
shareholders who receive no dividends.

Answer(s): D

Explanation:

Shareholders, whether they receive dividends or not, are not considered creditors. Creditors do have a stake in the success of a company, but they are not owners of the company.

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QUESTION: 1512

The allowance for uncollectible accounts is based on all of the following except:

Experience.
Profitability expectancy.
Customer fortunes.
Industry expectations.

Answer(s): B

Explanation:

The allowance should be based on expectations both internal and external to the corporation. The effect on the bottom line should not be used as a method of determining the uncollectible amounts.

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Free CFA-Level-I Exam Braindumps (page: 378)

QUESTION: 1509

Explanation:

QUESTION: 1510

Explanation:

QUESTION: 1511

Explanation:

QUESTION: 1512

Explanation: