Financial Accounting

A liability rarely is established for product warranties because of uncertainty as to the amount of the liability

Interest on a promissory note is recognizedd when the note is issued

The allowance method of handling bad debts violates the matching principle

The term wages refers to the compensation of employees who are paid at a montly or yearly rate

The amount of property tax payable is usually an estimated liability for a portion of the year

The costs associated with coupons and rebates are usually reflected in contra revenue accounts

Only the unused portion of a line of credit is recognized as liability

Vacation pay is charged properly as an expense in the month in which an expense in the month in which the employer takes a vacation

The account Allowance for Uncollectible Accounts is closed at the end of the accounting period

If the amount of a liability cannot be excatly determined, it should not be recorded

Unearned revenue is an example of a definitely determinable liability

Trade credit arises from wholesale or retail sales

Companies that experience seasonal cycles of business activity need not manage their cash as carefully as companies whose business is not cyclical

Customers with credit balances in their accounts are entitled to a refund if they do not intend to make any future purchase

Having a compensating balance increases a company's liquidity

Because bad debt losses are incurred to generate sales, they should be charged against the sales that they helped generate

They receivable turnover is expresed in terms of dollars

Following a lenient credit-granting policy will probably result in fewer defaults by customers

The direct charge-off method makes no attempt to match bad-debt loses with revenues.