The Following Information Is Related to December 31, 2013 Balances

question 196

Multiple Choice

The following information is related to December 31, 2013 balances. $\begin{array}{lc}\text {- Accounts receivable } & \$ 700,000 \\\text {- Allowance for doubtful accounts (credit) } & (60,000) \\\text {- Cash realizable value } & 640,000\end{array}$ During 2014 sales on account were $195,000 and collections on account were $115,000. Also, during 2014 the company wrote off $11,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that bad debts should be estimated at $72,000. The change in the cash realizable value from the balance at 12/31/13 to 12/31/14 was

• A) $68,000 increase.
• B) $80,000 increase.
• C) $57,000 increase.
• D) $69,000 increase.

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Definitions:

Stabilization Policies

Government strategies aimed at reducing fluctuations in the economy through monetary and fiscal policy measures to achieve low inflation, reduced unemployment, and sustainable growth.

Recession

A spell of economic retrenchment characterized by a reduction in manufacturing and trade activities, typically signified by two successive quarters of GDP decline.

Inflation

How quickly the average cost of goods and services goes up, resulting in a decrease in the ability to purchase.

Economic Growth

A rise in the output of goods and services in an economy over a certain period, frequently assessed using GDP.