A Retailer Sells,for Cash,a Television Set with a Two-Year Service

question 121

True/False

A retailer sells,for cash,a television set with a two-year service contract.The retailer initially records the cash received for the service contract as Unearned Revenue.

Comprehend the financial implications and journalizing of notes receivable, including interest calculation and maturity value determination.

Mastery of the direct write-off method for uncollectible accounts, including effects on the accounting equation.

Grasp the allowance method for uncollectible accounts, understanding the adjusting entries and their impacts.

Learn how to prepare the current assets section of the balance sheet.

---

Definitions:

Consolidated Equity

The total equity in a consolidated financial statement, combining the parent company's and its subsidiaries' equity.

Parent Interest

Refers to the portion of equity in a subsidiary attributable directly to the parent company, excluding any minority or non-controlling interests.

Fair Value

The price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Active Market

A market in which assets or securities are frequently traded, providing reliable price information and liquidity.