Canadian Accounting Classifies Accounts Receivable as "Current", "Late", and "Not

question 35

Multiple Choice

Canadian Accounting classifies accounts receivable as "current", "late", and "not collectible".
Industry figures show that 60% of A/R are current, 30% are late, and 10% are uncollectible. A law
firm in Markham Ontario has 500 accounts receivable: 320 are current, 120 are late and 60 are not
Collectible. Are these numbers in agreement with the industry distribution?
Using the data from this Megastat printout, you determine:

• A) the Markham firm's data reflect the national average, when tested at the 0.10 level of significance.
• B) the Markham firm's data reflect the national average, when tested at the 0.05 level of significance.
• C) the Markham firm's data reflect the national average, when tested at the 0.01 level of significance.
• D) the Markham firm's data do not reflect the national average, when tested above a 0.01 level of significance.

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Definitions:

Equity Method

A procedure for accounting for ownership interests, where the investment's carrying amount is adjusted for the investor's proportionate share of the associate company's profits or losses over time.

Investment Account

An account held at a financial institution that holds investments such as stocks, bonds, mutual funds, and other assets for the investor.

Subsidiary

A company controlled by another company, often referred to as its parent company, through ownership of more than half of its voting stock.

Initial Value Method

An accounting approach where an investment is recorded initially at cost, without adjusting for changes in market value over time.