Chapter 14 True/False
true
The expense of an uncollectible account should be recorded in the accounting period that the revenue is earned.
true
the adjusting entry of uncollectible accounts does not affect the balance of the Accounts Receivable account.
true
the book value of accounts receivable must be a reasonable and unbiased estimate of the money the business expects to collect in the future.
false
a business having a $300 credit balance in Allowance of Uncollectible Accounts and estimating its uncollectible accounts to be $4000 would record a $4300 credit to Allowance for Uncollectible Accounts.
false
a note provides the business with legal evidence of the debt should it be necessary to go to court to collect.
true
interest income is classified as an Other Revenue account.
true
interest income should be recorded on a dishonored note receivable.
true
interest rates are stated as a percentage of the principal.
true
the account, Allowance for Uncollectible Accounts, has a normal credit balance.
true
the account, Allowance for Uncollectible Accounts, is reported on the balance sheet.
true
the accounting concept, Neutrality, is applied when the process of making accounting estimates is free from bias.
true
the direct write-off method of accounting for uncollectible accounts does not comply with GAAP.
true
the method for calculating interest is the same for notes payable and notes receivable.
true
when a customer account is written off under the allowance method, book value of accounts remains the same.
true
when a previously written-off account is collected, Accounts Receivable is both debited and credited for the amount collected.
false
when an account is written off as uncollectible, the business sends the customer a credit memo.
false
A business usually knows at the end of the fiscal year which customer accounts will become uncollectible.
true
the percent of each age group of an accounts receivable aging that is expected to become uncollectible is determined by past cash receipts data.
true
the percent of sales method of estimating uncollectible accounts expense assumes that a percent of credit sales will become uncollectible.
false
total assets are reduced when a business accepts a note receivable from a customer needing an extension of time to pay an account receivable.