The Balances of Select Accounts of Sandra Company as at December

question 42

Multiple Choice

The balances of select accounts of Sandra Company as at December 31, 2015 are given below: The unearned revenue is the amount of cash received for services to be rendered in January, 2016. What are the total current liabilities shown on the balance sheet?

• A)$5,700
• B)$10,400
• C)$12,900
• D)$11,700

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Definitions:

Allowance Method

An accounting technique used to estimate and adjust accounts receivable for amounts that are unlikely to be collected.

Carrying Value

The value of an asset as shown on the balance sheet, representing its original cost minus any accumulated depreciation, impairment, or amortization.

Allowance Method

A technique used in accounting to estimate and account for bad debts by recognizing them as an expense before the debts actually become uncollectible.

Bad Debts Expense

Bad debts expense represents the recognition of accounts receivable that are not expected to be collected, impacting a company's financial statements.