The Assets of ALS Ltd Increased by $5476 During Year

question 14

Multiple Choice

The assets of ALS Ltd increased by $5476 during year ended 30 June 2012 and during the same period liabilities decreased by $3019.Consequently shareholders' equity must have:

• A) increased by $2457
• B) increased by $8495
• C) decreased by $2457
• D) decreased by $8495.

Grasp the initial recording of trade receivables and the rationale behind selecting accounting methods for them.

Understand the estimation of bad debt expense based on historical relationships and its impact on financial statements.

Recognize the advantages and appropriate application of the net price method for recording cash discounts on credit sales.

Analyze the treatment of uncollectible accounts under different accounting methods and the conceptual rationale behind these methods.

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Definitions:

Conversion Feature

A provision in some financial instruments that allows the holder to convert the instrument into another asset, often shares of the company's common stock, at a predetermined price.

Convertible Bonds

Bonds that can be converted into a predetermined amount of the issuing company's equity at certain times during their life, usually at the discretion of the bondholder.

Callable

A term describing a financial security (such as a bond) that the issuer has the right to redeem before its maturity date, usually at a specified call price.

Mortgage Bonds

Debt securities secured by a mortgage on the issuer's property, prioritizing bondholder claims on assets in case of default.