Exam 2 study guide

note receivable

A formal, signed credit agreement between a lender and a borrower is called a(n) _____ by the lender.

Cost of Goods Sold, Inventory

Because prices change over time, costs reported for these accounts tend to differ among inventory cost methods.

FOB

Free on board

included in Gerald's inventory.

Gerald Corporation purchases inventory FOB shipping point. The shipping costs are $300. The shipping costs are

c

Ophelia Inc. just learned that Patton Inc., one of its customers with an outstanding accounts receivable balance, filed for bankruptcy. Assuming that the company utilizes the allowance method, Ophelia should record a(n): (a) increase in Allowance for Doubtful Accounts (b) increase in Accounts Receivable (c) decrease in Accounts Receivable (d) increase in Sales Revenue (e) decrease in Sales Revenue

determines that a specific customer account will not be collectible

The Accounts Receivable account is reduced when the seller:

lower of cost and net realizable value; greater

The ______ method of valuing inventory was developed to avoid reporting inventory at an amount that is ______ than the benefits it can provide.

aging

The approach that considers the age of various accounts receivables to estimate uncollectible accounts is referred to as the ___________method of accounts receivable.

increase, increase

When Purchasing inventory on account, assets _________ and liabilities _______

In either current or noncurrent assets, as appropriate.

Where is a note receivable reported in the balance sheet? Multiple choice question.