91影视

The sacrifices made by the business entity in the functions that are not considered as core functions of the business are known as administrative expenses.

Since the company is acalendar-year company, the financial year-end of 31 December each year, in the above case, the business entity will accrue 6-months interest on the note at year-end on 31 Dec 2017. The remaining interest for six months will be recognized when collected on 30 June 2018. Rationale: The business entity will use the accrual method of accounting as it provides more reliable and useful information than cash accounting.

(a) Rationale: The allowance method of recognizing bad debt complies with the matching principle's accounting principle. It tries to calculate the net realizable value of the accounts receivables and reports thebad debt expenses in the year in which the company's credit quality decreases. It is done using the aging schedule of the receivables and considering the bad debt expenses and adjustments that will bring the allowance account balance to the required balance.

(b) The company will report the allowance account on the balance sheet as a contra asset account and will be deducted from the accounts receivables under the current asset section. The bad debt expenses must be reported as other selling and administrative expenses in theincome statement. Sometimes it is deducted from the sales, same as discount and returns, and sometimes it is reported as finance expense.