The receivable that is usually evidenced by a formal, written instrument of credit is a(n) a.trade receivable b.note rec...
The receivable that is usually evidenced by a formal, written instrument of credit is a(n)
a.trade receivable
b.note receivable
c.accounts receivable
d.income tax receivable
When does an account become uncollectible?
a.there is no general rule for when an account becomes uncollectible
b.at the end of the fiscal year
c.when a discount is available on notes receivable
d.when accounts receivable is converted into notes receivable
Two methods of accounting for uncollectible accounts are the
a.allowance method and the accrual method
b.direct write-off method and the allowance method
c.allowance method and the net realizable method
d.direct write-off method and the accrual method
Indications that an account may be uncollectible include all of the following except
a.the customer is making small but regular payments
b.the customer cannot be located
c.the customer files for bankruptcy
d.the customer closes its business
If the allowance method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible?
a.Uncollectible accounts expense
b.Allowance for doubtful accounts
c.Accounts receivable
d.Interest expense
On the balance sheet after adjusting entries are made, the amount shown for the Allowance for Doubtful Accounts is equal to the
a.total of the accounts receivable written off during the year
b.total estimated uncollectible accounts as of the end of the year
c.sum of all accounts that are past due
d.uncollectible accounts expense for the year
Homework Answers
ANSWER:
(1)
OPTION b: note receivable
EXPLANATION:
notes receivable is the written instrument used in the business
(2)
OPTION a: there is no general rule for when an account becomes uncollectible
EXPLANATION:
There is no hard and fast rule to determine exactly as to when an account is becoming uncollectible
(3)
OPTION b: direct write-off method and the allowance method
EXPLANATION:
these are the two due methods for accounting of uncollectible accounts
(4)
OPTION a: the customer is making small but regular payments
EXPLANATION:
this fact does not provide a material possibility or doubt regarding an account being uncollectible in future.
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