acct
Which of the following are true regarding the allowance method for recording uncollectibles?
A contra asset account related to accounts receivable is used to hold the estimated amount of uncollectible accounts/Bad debts expense for the period is estimated by recording an adjusting entry at the end of the period
When a business records bad debts expense using the direct write-off method, the journal entry to record the write-off includes
A credit to the customer's accounts receivable account
When a business unexpectedly receives payment from a customer whose account was previously written off
The customer's accounts receivable account is first increased with a debit, then reduced with a credit/ Cash is increased with a debit/ Bad Debts Expense is decreased with a credit
A method of estimating uncollectible receivables by determining the balance of the Allowance for Bad Debts account based on how long each individual accounts receivable balance has been outstanding is called the
aging of receivables
Which of the following is not one of the three most common ways to estimate bad debts expense using the allowance method
aging of sales method
When bad debts expense is estimated and recorded at the end of the period using the allowance method
bad debts expense is increased with a debit
Under the allowance method, bad debts expense is not recorded when a customer's account is written off because
bad debts expense is only estimated and the estimate is recorded only at the end of an accounting period
Bad Debts Expense
is the cost that arises when a business is unable to collect from a credit customer.
Under the allowance method, businesses estimate their bad debts expense by considering
its past history of uncollectible accounts; the industry it operates in; the state of the economy
The net amount a business expects to collect from its accounts receivable is called the
net realizable value
When writing off a customer's account using the allowance method
the allowance for bad debts account is decreased with a debit
A limitation of the direct write-off method is that it violates the matching principle by not recording the bad debts expense in the same fiscal period as the related revenue.
true
The allowance method for recording uncollectibles is allowed by Generally Accepted Accounting Principles.
true
The direct write-off method is mainly used by large public companies to account for uncollectible accounts
true
The direct write-off method is required according to Generally Accepted Accounting Principles.
true
The net realizable value of accounts receivable after a customer's account is written of is the same dollar amount before the customer's account was written off.
true
When using the direct write-off method, bad debts expense is recorded on the day the business determines the account is deemed uncollectible.
true