chap 5 quiz

payment for credit sales are typically due in ____ to ____ days

30; 60

Raven receives a 3-year note receivable from a customer for goods sold. How should Raven report this note receivable in its financial statements?

a non current asset

Trade receivable is another term for ____ receivable

accounts

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

allowance for uncollectible accounts

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

compared to other methods of estimating uncollectible accounts, the aging of accounts receivables method tends to

be more accurate

Zeigen Inc. debited accounts receivable and credited allowance for doubtful accounts. Zeigen inc. should also debit ____ and credit ____ ____

cash; accounts receivable

A(n) ___ balance before adjustment indicates that the estimate of uncollectible accounts at the beginning of the year may have been too high

credit

the account "Allowance for Uncollectible Accounts" normally has a ___ balance

credit

Sales to customers in which the customers pay within 30 to 60 days are referred to as

credit sales; sales on account

A(n) ___ balance before the adjustment indicates that the estimate of uncollectible accounts at the beginning of the year may have been too low

debit

Glasser Corp. provided $20,000 of services on account. The account that should be credited is ____ ____

service revenue

The allowance method is required consistent under ___

the GAAP

Accounts receivable 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

The allowance method estimates

uncollectible accounts

notes receivable normally has a(n) ____ balance because it is classified as a(n) _____

debit; asset

The accounts receivable is reduced when the seller:

determines that a specific customer account will not be collectible

the formula for calculating interest on a note is

face amount x annual rate x fraction of the annual period

When the allowance method is used, the write-off of an uncollectible account

has no effect on net income

accounts receivable are normally classified

in the balance sheet as current assets

When a company has earned interest in the current period but has not yet recorded the interest, what type of adjustment is the company required to make?

make an adjusting entry at the end of the current period to accrue the interest earned

the ____ ___ value of accounts receivable is the amount of cash a company expects to collect

net realizable

a formal credit arrangement between a creditor and a debtor is called a(n)

note receivable

a claim to receive cash in the future is a _____

receivable

Bad debt expense is reported on the ___ ___ and classified as a(n) ____ ____

income statement; operating expense