A Company Had Sales Revenue of $13,900 in the First

question 5

Multiple Choice

A company had sales revenue of $13,900 in the first quarter (Q1) and $11,500 in the second quarter (Q2) .The company's expenses (including bad debt expense) were $7,300 in Q1 and $6,900 in Q2.If the company raised its bad debt expense estimate by $800 in Q1 and lowered it by $800 in Q2,which of the following would be true assuming all else equal?

• A)Q1 net income would fall $800 and Q2 net income would rise $1,600.
• B)Q1 net income would fall $1,600 and Q2 net income would rise $1,600.
• C)Q1 net income would fall $800 and Q2 net income would rise $800.
• D)Q1 net income would fall $1,600 and Q2 net income would rise $800.

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Definitions:

Journal Entry

A record in accounting that represents a transaction with debits and credits documented in the appropriate accounts.

Streamline

To simplify or eliminate unnecessary steps in a process to increase efficiency and improve performance.

Purchasing Process

The sequence of steps followed by an organization to acquire goods or services, starting from the identification of the need to the receipt and approval of the item.

Cash Equivalents

Short-term, highly liquid investments that can be easily converted into a known amount of cash.