ACT Chapter 5; Receivables and Sales

false

t/f The Percentage-of-Receivables approach to measuring bad debt expense focuses on the ration of accounts receivables to sales

false

t/f? Accounts receivable are classified as current assets because they accrue interest at a specified interest rate

false

t/f? Accounts receivable are classified as current assets because they are a formal agreement to pay within a specific period of time

false

t/f? Accounts receivable are classified as current assets because they are matched with accounts payable for the period

true

t/f? Accounts receivable are classified as current assets because they will be converted to cash within 1 year or the normal operating cycle

true

t/f? Accounts receivable are normally classified in the balance sheet as current assets

false

t/f? Accounts receivable are normally classified in the balance sheet as noncurrent assets

false

t/f? Accounts receivable are normally classified in the income statement as other income

false

t/f? Accounts receivable are normally classified in the income statement as revenue

decreases, retained

A sales allowance __________ the amount owed by the customer for merchandise that is ______ by the customer.

expenses, revenues

Adjusting for estimates of future uncollectible accounts matches ____________ in the same period as the _________ they help to generate

net realizable value

Gross accounts receivable less allowance for doubtful accounts is the __________ ______________________ of accounts receivable

sales allowance

a partial adjustment to the amount owed by the customer for goods that were not returned, but did not fully meet the customer's expectations is referred to as ___________________________

credit

The account "allowance for uncollectible accounts" normally has a ________ balance

uncollectible acocunts

The allowance method estimates _______________________

bad debt expense

The amount of adjustment to the allowance for uncollectible accounts is referred to as ____________________________

percentage-of-receivables method

The method of estimating uncollectible accounts based on the percentage of accounts receivable expected not to be collected is referred to as the _________________________

allowance for uncollectible accounts

To record bad debts at the end of the period, an adjustment would be made by a credit to _______________

contra asset

What type of account is Allowance for Uncollectible Accounts?

Sales Return

When merchandise is returned for a refund or for credit to be applied to other purchases, this situation is called a _____________________________

allowance method

recording an adjustment at the end of each period to allow for the possibility of future un-collectible debt is referred to as the ________________________ under US GAAP.

false

t/f The Percentage-of-Receivables approach to measuring bad debt expense focuses on cash flows from sales

false

t/f The Percentage-of-Receivables approach to measuring bad debt expense focuses on matching net credit sales with the appropriate percentage expected to be uncollectable

true

t/f The Percentage-of-Receivables approach to measuring bad debt expense focuses on net realizable value of accounts receivable