Unit 6 Study Guide Accounting II
Reopened customer account previously written off as uncollectible.
Debit: Accounts Receivable Credit: Allowance for Uncollectible Accounts
Reopened customer account previously written off as uncollectible.
Debit: Accounts Receivable Credit: Uncollectible Accounts Expense
Wrote off customer account as uncollectible.
Debit: Allowance for Uncollectible Accounts Credit: Accounts Receivable
Received cash in full payment of customer account.
Debit: Cash Credit: Accounts Receivable
Wrote off customer's account as uncollectible.
Debit: Uncollectible Accounts Expense Credit: Accounts Receivable
Recorded adjustment for uncollectible accounts expense when using aging accounts receivable method to calculate the amount.
Debit: Uncollectible Accounts Expense Credit: Allowance for Uncollectible Accounts
Recorded adjustment for uncollectible accounts expense when using the percentage of accounts receivable account to calculate the amount.
Debit: Uncollectible Accounts Expense Credit: Allowance for Uncollectible Accounts
Recorded adjustment for uncollectible accounts expense.
Debit: Uncollectible Accounts Expense Credit: Allowance for Uncollectible Accounts
A business can use the direct write-off if accounts receivable are reported on the balance sheet at net realizable value.
False
A company that estimates its uncollectible accounts receivable are $5,000.00 and a $200.00 credit balance in Allowances for Uncollectible Accounts will increase the allowance account by $5,200.00.
False
A company whose accounts receivable turnover ratio declines from 9.3 to 8.7 is doing a better job in collecting its account receivable.
False
The book value of accounts receivable represents the total amount owed to the business from sales on account.
False
The direct write-off method is more difficult to apply than the allowance method.
False
Using the allowance method, writing off an account increases Uncollectible Accounts Expense.
False
Using the allowance method, writing off an uncollectible accounts receivable reduces the net realizable value of accounts receivable.
False
When a customer account is known to be uncollectible, the account becomes a liability.
False
A company may continue its attempts to collect an account even after the account has been written off.
True
A disadvantage of the direct write-off method of recording uncollectible accounts expense is that the expense may not be recorded in the same fiscal period as the revenue for the sale.
True
An aging of accounts receivable analyzes accounts receivable by age-categories according to when payments are due.
True
Because there is no way of knowing for sure which customer accounts will become uncollectible, the allowance method uses an estimate based on past history to determine uncollectible accounts expense.
True
Recording uncollectible accounts expense in the same fiscal period in which the original sale on account was made is an application of the Matching Expenses with Revenue accounting concept.
True
The accounts receivable turnover ratio is calculated by dividing net sales by the average book value of accounts receivable.
True
The book value of accounts receivable is often referred to as the net realizable value.
True
The formula for calculating the amount of uncollectible accounts expense based on a percentage of net sales is: Net Sales times percentage equals estimated uncollectible accounts expense.
True
The journal entry used to write off an uncollectible account is the same, regardless of the method used to calculate the estimate of Allowance for Uncollectible Accounts.
True
Uncollectible accounts are sometimes referred to as bad debts.
True
Until a specific amount is known to be uncollectible, the amount remains recorded in Accounts Receivable.
True
Using the direct write-off method, collecting a previously written off account results in a credit to an expense account.
True
Uncollectible Accounts
accounts receivable that cannot be collected
Aging Accounts Receivable
analyzing accounts receivable according to when they are due
Writing Off an Account
cancelling that balance of a customer accounts because the customer is not expected to pay
Allowance Method
crediting the estimated value of uncollectible accounts to a contra account
Direct Write-Off Method
recording uncollectible accounts expense only when an amount is actually known to be uncollectible
Days' Sales in Accounts Receivable
the average period of time to collect an account receivable
Book Value
the difference between an asset's account balance and its related contra account balance
Accounts Receivable Turnover Ratio
the number of times the average amount of accounts receivable is collected during a specified period