A Newspaper Ad for a Local Toy Store Indicates That

question 5

Multiple Choice

A newspaper ad for a local toy store indicates that a very inexpensive microscope available for a small child is able to magnify specimens nearly as much as the much more costly microscope available in your college lab. What is the primary reason for the price difference?

• A) The ad agency is misrepresenting the ability of the toy microscope to magnify.
• B) The toy microscope does not have the same fine control for focus of the specimen.
• C) The toy microscope has good magnification, but has low resolution and therefore poor-quality images.
• D) The college microscope produces greater contrast in the specimens.

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Definitions:

Contra-Asset

A contra-asset account is an asset account where the balance of the account will either be a zero or a negative figure, which offsets the balance of the related asset account.

Doubtful Accounts

Receivable accounts that may potentially become bad debts as the likelihood of collection is uncertain.

Balance Sheet

The balance sheet is a financial statement that shows a company's financial position at a specific point in time, listing assets, liabilities, and shareholders' equity.

Allowance Method

Bases bad debt expense on an estimate of uncollectible accounts.