Acct 1A Ch 5

The allowance method is required by __________

GAAP

The account "Allowance for Uncollectible Accounts" is classified as a contra asset to accounts receivable. a contra equity account. an expense in the income statement. a liability account in the balance sheet.

a contra asset to accounts receivable.

A(n) __________ __________ is the legal right to receive cash from a credit sale and represents an asset of the company.

account receivable

The allowance for uncollectible accounts is a contra account to accounts receivable. bad debt expense. sales allowances. revenue.

accounts receivable.

To record an estimate for future bad debts at the end of the period, an adjustment would be made with a credit to accounts receivable. allowance for uncollectible accounts. bad debt expense. sales returns and allowances.

allowance for uncollectible accounts.

Accounts receivable should be classified as a(n) asset. liability. revenue. expense.

asset.

The formula to compute the receivables turnover ratio is net credit sales divided by the receivable turnover ratio. average total assets. average accounts receivable. average accounts payable.

average accounts receivable.

A trade discount is a reduction from the list price, which is used to: (Select all that apply.) encourage customers to pay quickly change prices without publishing a new catalog give quantity discounts to customers reduce the sale price for interest received disguise real prices from competitors

change prices without publishing a new catalog give quantity discounts to customers disguise real prices from competitors

The account "Allowance for Uncollectible Accounts" normally has a ___________ balance. (Enter only one word.)

credit

The journal entry to record bad debt expense includes: (Select all that apply.) credit to allowance for uncollectible accounts debit to allowance for uncollectible accounts credit to bad debt expense debit to bad debt expense

credit to allowance for uncollectible accounts debit to bad debt expense

Kilroy Corporation provides services to a customer for $1,000. The customer complained that there was a slight defect in the service. Kilroy granted the customer a $50 credit. Kilroy will record this adjustment to the sales price with a debit to Cash $50. debit to Sales Allowances $50. debit to Accounts Receivable $50. credit to Sales Allowances $50.

debit to Sales Allowances $50.

The journal entry to record bad debt expense includes: (Select all that apply.) debit to allowance for uncollectible accounts debit to bad debt expense credit to allowance for uncollectible accounts credit to bad debt expense

debit to bad debt expense credit to allowance for uncollectible accounts

Pixie Inc. writes off a specific accounts receivable. If Pixie is using the allowance method, the write off will _____ net income. increase decrease not affect

not affect

A customer account that is not expected to be collected is referred to as a bad debt or __________ account. (Enter one word per blank)

uncollectible

An informal credit arrangement with a customer for payment to be received after the sale is classified as a(n) note payable. nontrade receivable. prepaid receivable. account receivable.

account receivable.

To record an estimate for future bad debts at the end of the period, an adjustment would be made with a credit to sales returns and allowances. bad debt expense. allowance for uncollectible accounts. accounts receivable.

allowance for uncollectible accounts.

A company that expects that some of its customers will not pay the agreed upon sales price must utilize the bad debt method direct write-off method allowance method debt forgiveness method

allowance method

With the allowance method, bad debt expense is recorded when the account becomes uncollectible. at the end of the period when bad debts are estimated. when the customer returns the product. when the customer purchases the goods.

at the end of the period when bad debts are estimated.

A cash discount representing a reduction in the amount to be paid by a credit customer if the customer pays within a specified period of time is also referred to as a(n) __________ discount.

sales

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 a sales credit. debit. discount. allowance.

allowance.

Prime Corp. has an ending balance in the accounts receivable account of $100,000. Prime recorded bad debt expense of $3,000. Prime has an ending balance in the allowance for uncollectible accounts of $7,000. What is the net accounts receivable balance? $107,000 $93,000 $90,000 $97,000

$93,000

Net revenues is calculated as total revenues minus which of the following items? Accounts receivable Allowance for uncollectible accounts Sales allowances Sales discounts Sales returns

Sales allowances Sales discounts Sales returns

A(n) ___________ ___________ is the legal right to receive cash from a credit sale and represents an asset of the company.

account receivable

Adrian Corp. sells goods on account for $100,000 on May 1. The customer paid for the goods on May 10. On May 15, the customer returns $40,000 of the merchandise. The entry Adrian makes on May 15 will include the following: (Select all that apply.) debit to Sales Expense credit to Accounts Receivable credit to Allowance for Sales Returns debit to Sales Returns credit to Cash

debit to Sales Returns credit to Cash

A sales allowance ____ the amount owed by the customer for merchandise that is _____ by the customer. increased; retained increases; returned decreases; retained decreases; returned.

decreases; retained