Accounting- Chapter 5

The allowance for uncollectible accounts is a contra account to:

accounts receivable

Gross accounts receivable less allowance for doubtful accounts is the net ____ value of accounts receivable.

realizable

A claim to receive cash in the future is a _____.

receivable

Another term sometimes used for accounts receivable is_____

trade receivable

Identify the likely disadvantages of extending credit to customers.

-delays in collecting accounts -accounts that are uncollectible

Credit sales typically include an informal credit arrangement requiring payment within _____ days.

30 to 60 days

An _____ _________ is the legal right to receive cash from a credit sale and represents an asset of the company.

account receivable

The first step in using the percentage of receivable approach to estimate bad debts to calculate the desired ending balance in which account?

allowance for uncollectible accounts

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

allowance for uncollectible accounts

A company that expects that some of its customers will not pay the agreed upon sales price just utilize the:

allowance method

For a typical credit sale, the revenue recognition criteria is usually satisfied

at the point of delivery

The estimated expense for accounts that may not be collected that is matched against revenue of the period is referred to as:

bad debt expense

When a business sells goods to a customer and the customer promises to pay later, this is referred to as ____ _____.

credit sales

Accounts receivable should be classified as a:

current asset

A disadvantage to selling on account is:

customers do not always pay

The allowance method is a method of accounting that ____ net accounts receivable (as well as net income) for estimated bad debts.

decreases

Accounts receivable are normally classified

in the balance sheet as current assets

Income tax receivable is a ____ receivable.

nontrade

What type of payment terms tend to increase sales and profitability in the long-run?

sales on account

Accounts receivables are classified as current assets because:

they will be converted to cash within 1 year or the normal operating cycle

A customer account that is not expected to be collected is referred to as a bad debt or ____ account.

uncollectible

Adjusting for estimates of future uncollectible accounts matches ______ in the same period as the _____ they help to generate.

-expenses -revenues

Which of the following are classified as receivables?

-interest due from loans to customers -loans by a company to other entities

The two conditions that must exist for a sale and the related receivable to be recognized are:

-the company has provided goods or services to the customer -collection from the customer is profitable