ACCT 210 - Smartbook Questions Chapter 8

The adjusting entry to record the estimated amount of bad credit sales is a debit to Bad Debt Expense and a credit to ___________ ___________ ___________ ___________. (enter only one word per blank)

>Allowance >for >Doubtful >Accounts

Which of the following are contra-asset accounts?

>Allowance for Doubtful Accounts >Accumulated Depreciation

The allowance method requires that ______. (Check all that apply.)

>Allowance for Doubtful Accounts be netted against Accounts Receivable >Bad Debt Expense be recorded in the same period as the related credit sales

Which of the following is recorded at the end of an accounting period when accounting for receivables using the allowance method?

>An estimate is recorded by debiting Bad Debt Expense and crediting Allowance for Doubtful Account in the same period as the related sale.

The adjusting entry to record the allowance for doubtful accounts includes a ____________.

>Credit to Allowance for Doubtful Accounts >Debit to Bad Debt Expense

When using the allowance method, the adjusting entry to record estimated bad debt expense includes a ______. (Check all that apply.)

>Debit to Bad Debt Expense >Credit to Allowance for Doubtful Accounts

Sales on accout ___________.

>Increase Accounts Receivable on the balance sheet and Sales Revenue on the income statement >Increase assets and stockholders' equity

Which of the following are the advantages of extending credit to customers?

>Increased Demand >Increased Sales

A sale on account is recorded with a debit to ___________ ____________ and a credit to ______________ _______________.

>account >receivable >sales >revenue

To be in accordance with GAAP, companies are required to estimate the amount of uncollectible receivables and make an adjusting entry. The effect of the adjusting entry is to ______.

>reduce Net Income by debiting Bad Debt Expense and reduce net accounts receivable by crediting Allowance for Doubtful Accounts

Which of the following statements is true?

Allowance for Doubtful Accounts is a permanent account

The advantage of extending credit to customers is that it helps customers to buy products and services, thereby increasing the seller's revenue. The disadvantages of extending credit are costs related to ______.

Bad Debt Expense

A disadvantage of extending credit to customers is that the cost may ______ the additional sales revenue received through credit transactions.

Exceed

True or False: The adjusting entry to record Bad Debt Expense includes a credit to Accounts Receivable.

False

When will a bankrupt customer's accounts receivable be eliminated? When the company records ______.

a write off

Ima Broke is a customer that owes the company for credit sales and has declared bankruptcy. As a result, Ima Broke's subsidiary account receivable will be eliminated when ______.

a write off is recorded by debiting Allowance for Doubtful Accounts and crediting Accounts Receivable

Which of the following is contra-asset account?

allowance for doubtful accounts

Accounts Receivable represent ___________.

amounts owed to a business by its customers

Bad Debt Expense is a _________.

temporary account so its balance is closed (zeroed out) at the end of the accounting period