Shaun Is a Student Who Has Received an Academic Scholarship

question 126

Multiple Choice

Shaun is a student who has received an academic scholarship to State University. The scholarship paid $14,000 for tuition, $2,500 for fees, and $1,000 for books. In addition, Shaun's dormitory fees of $8,500 were paid by the University when he agreed to counsel freshman on campus living. What amount must Shaun include in his gross income?

• A) $9,500
• B) $11,000
• C) $2,500
• D) $8,500
• E) Zero - None of these benefits is included in gross income

Identify and explain indicators of uncollectible accounts.

Understand and apply terms related to receivables and interest calculations.

Utilize the direct write-off and allowance methods for accounting for uncollectible receivables.

Journalize transactions involving the write-off and recovery of uncollectible receivables.

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Definitions:

Break-Even Sales

The level of sales at which total revenues equal total costs, resulting in neither profit nor loss for the business.

Common Fixed Expenses

Common fixed expenses are costs that do not fluctuate with the volume of production or sales, shared by different segments or products of a business, like rent and insurance.

Operating Period

The span of time during which a company or a project is expected to operate or carry out its activities.

Break-Even Sales

The amount of revenue required to cover all fixed and variable costs, resulting in a net income of zero.