Question

Match the descriptions below with the correct answer, using the letter codes shown in the table below. (8 points)
A.    Realizable value
B.    Percentage of receivables method
C.      1/10, n/60
D.    Bad debt Expense
E.      Aging of receivables
F.       Direct write-off method
G.     Operating cycle
H.     Specific identification method
I.        FOB shipping point
J.        Time period assumption
K.    n/10 EOM

L.    Percentage of sales method

M.   Permanent accounts
N.    2/10, EOM

O.    2/10, n/30
P.     FOB destination

The economic life of a business should be divided into
Answer 1
Shipping terms that would typically mean that the buyer has to pay the freight charges
Answer 2
would result in a $100 discount for early payment of a $10,000 purchase
Answer 3
Accounts whose balances are carried forward to the next period
Answer 4
Credit terms that allow for a 2% discount if paid within the first 10 days from the purchase date.
Answer 5
A method used to approximate uncollectible accounts which results in better matching of expenses and revenues
Answer 6
The average time that it takes to go from cash to cash in producing revenues.
Answer 7
Analysis of customer account balances by length of time they have been unpaid.

Answer 1

The economic life of a business should be divided into
J.        Time period assumption

Shipping terms that would typically mean that the buyer has to pay the freight charges
I.        FOB shipping point

would result in a $100 discount for early payment of a $10,000 purchase
C.      1/10, n/60

Accounts whose balances are carried forward to the next period
M.   Permanent accounts

Credit terms that allow for a 2% discount if paid within the first 10 days from the purchase date.
O.    2/10, n/30
If more than one options can be selected, then it can also be N.    2/10, EOM

A method used to approximate uncollectible accounts which results in better matching of expenses and revenues
L.    Percentage of sales method

The average time that it takes to go from cash to cash in producing revenues
G.     Operating cycle

Analysis of customer account balances by length of time they have been unpaid
E.      Aging of receivables