21.The direct write-off method of accounting for uncollectible accounts overstates assets on the balance sheet.
22.With the direct write-off method, writing off an account receivable is an asset use transaction.
23.The year-end adjusting entry to accrue interest on a note receivable is an asset source transaction.
24.On June 1, 2013, Cho Company collected a $12,000 note receivable that had been issued on June 1, 2012. The note carried a 6% interest rate. The interest revenue recognized on the maturity date is $720.
25.Making a loan to another party is considered an investing activity on the statement of cash flows.
26.Accepting credit cards is usually more costly to a business than offering credit directly to customers.
27.When a company accepts a credit card payment for a sale, the amount of sales revenue to be recorded is reduced by the amount of the credit card company's fee.
28.Collection of a credit card receivable is an asset source transaction.
29.Carter Company's sales for 2013 were $8,700,000. Its accounts receivable were $720,000 at the beginning of 2013 and $801,000 at the end of the year. The accounts receivable turnover ratio for the year was 12.1.
30.The longer it takes to collect accounts receivable, the greater the opportunity cost incurred.
31.The operating cycle is the length of time that a company spends acquiring inventory to sell.
32.Other things being equal, the longer a company's operating cycle, the higher its operating costs are likely to be.