The Collection of a $2,000 Account Beyond the 2 Percent

question 138

Multiple Choice

The collection of a $2,000 account beyond the 2 percent discount period would result in a(n)

• A)increase to Cash for $1,960.
• B)decrease to Accounts Receivable for $2,000.
• C)decrease to Cash for $2,000.
• D)increase to Sales Discounts for $40.

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Definitions:

Accumulated Depreciation

The total depreciation for a fixed asset that has been charged to expense since the asset was acquired and made available for use.

Salvage Value

The prognosticated worth of an asset at the close of its operational period.

Useful Life

The estimated duration of time that an asset is expected to be productive or useful, beyond which it is likely to be inefficient or obsolete.

Double-declining-balance Method

An accelerated depreciation method that doubles the straight-line depreciation rate and applies it to the undepreciated balance at the start of each period.