ACCATG201: ch 5 learnsmart

The account "Allowance for Uncollectible Accounts" normally has a ___________________ balance

credit

Accounts receivable has a $2,300 balance, and the Allowance for doubtful accounts has a $200 credit balance. An $80 account is written off. Net receivables (NRV) after the write-off equals:

net receivables = ($2,300-$80) - ($200-$80) = $2,100

Cobalt Corp, uses the allowance method to account for bad debts. If Cobalt writes off an account for $3,000, what is the effect on the balance sheet?

no effect on total assets

The purpose of recording an allowance for uncollectible accounts is to

report accounts receivable at the NRV

What are the financial statement effects of recording bad debt expense using the allowance method?

> increases expenses > decrease assets

Two entries are required when a previously written off account is paid. These two entries include:

> reinstate the account receivable > record the collection on the account receivable

The allowance method is required consistent under _______________

GAAP (Generally Accepted Accounting Principles)

The account "Allowance for Uncollectible Accounts" is classified as

a contra asset to accounts receivable

The term net accounts receivable refers to

accounts receivable - allowance for uncollectible accounts

The approach that considers the age of various accounts receivables to estimate uncollectible accounts is referred to as the _____________ method of accounts receivable

aging

Accounts Receivable account is reduced when the seller:

determines that a specific customer account will not be collectible

At the beginning of the year, Blocker COmpany's allowance has a debit balance of $10,000. This may indicate that the

estimate of uncollectible accounts was too low

With the allowance method, bad debt expense is recorded

at the end of the period when bad debts are estimated

At the beginning of the year, Gerta Company's allowance account has a credit balance of $10,000. This may indicate

estimate of uncollectible accounts was too high

Quavier Inc adjusts its allowance account to reflect the estimate of future uncollectible accounts. This adjustment achieves matching of expenses with revenue in the same period _________________

as the revenue they helped generate

The percentage-of-receivables approach to measuring bad debt expense focuses on

NRV of accounts receivable

Ophelia Inc just learned that Patton Inc, one of its customers with an outstanding receivable balance, filed for bankruptcy. Assuming the company utilizes the allowance method, Ophelia should record a(n):

decrease in Accounts Receivable

When the allowance method is used, the write-off of an uncollectible account:

has no effect on net income

An aging schedule classifies accounts receivable based on

length of time outstanding

The allowance method estimates

uncollectible accounts