According to Generally Accepted Accounting Principles,the Proper Accounting Treatment for the Cost

question 36

Multiple Choice

According to generally accepted accounting principles,the proper accounting treatment for the cost of a trademark that management feels will retain its value indefinitely is to

• A)write the cost off immediately.
• B)amortize the cost over a reasonable life.
• C)amortize the cost over five years.
• D)carry the cost as an asset as long as circumstances continue to support an indefinite life.

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Definitions:

Bad Debts

Unrecoverable accounts receivable that a business deems uncollectible, similar to bad debt expense but focused on the receivable aspect.

Month of Sale

Refers to the specific month in which a sale was completed or recognized, used in accounting and financial reporting.

Merchandise Purchases

The cost of goods bought for resale during a specific accounting period.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company.