ACCATG201: ch 5 learnsmart
The account "Allowance for Uncollectible Accounts" normally has a ___________________ balance
credit
Accounts receivable has a $2,300 balance, and the Allowance for doubtful accounts has a $200 credit balance. An $80 account is written off. Net receivables (NRV) after the write-off equals:
net receivables = ($2,300-$80) - ($200-$80) = $2,100
Cobalt Corp, uses the allowance method to account for bad debts. If Cobalt writes off an account for $3,000, what is the effect on the balance sheet?
no effect on total assets
The purpose of recording an allowance for uncollectible accounts is to
report accounts receivable at the NRV
What are the financial statement effects of recording bad debt expense using the allowance method?
> increases expenses > decrease assets
Two entries are required when a previously written off account is paid. These two entries include:
> reinstate the account receivable > record the collection on the account receivable
The allowance method is required consistent under _______________
GAAP (Generally Accepted Accounting Principles)
The account "Allowance for Uncollectible Accounts" is classified as
a contra asset to accounts receivable
The term net accounts receivable refers to
accounts receivable - allowance for uncollectible accounts
The approach that considers the age of various accounts receivables to estimate uncollectible accounts is referred to as the _____________ method of accounts receivable
aging
Accounts Receivable account is reduced when the seller:
determines that a specific customer account will not be collectible
At the beginning of the year, Blocker COmpany's allowance has a debit balance of $10,000. This may indicate that the
estimate of uncollectible accounts was too low
With the allowance method, bad debt expense is recorded
at the end of the period when bad debts are estimated
At the beginning of the year, Gerta Company's allowance account has a credit balance of $10,000. This may indicate
estimate of uncollectible accounts was too high
Quavier Inc adjusts its allowance account to reflect the estimate of future uncollectible accounts. This adjustment achieves matching of expenses with revenue in the same period _________________
as the revenue they helped generate
The percentage-of-receivables approach to measuring bad debt expense focuses on
NRV of accounts receivable
Ophelia Inc just learned that Patton Inc, one of its customers with an outstanding receivable balance, filed for bankruptcy. Assuming the company utilizes the allowance method, Ophelia should record a(n):
decrease in Accounts Receivable
When the allowance method is used, the write-off of an uncollectible account:
has no effect on net income
An aging schedule classifies accounts receivable based on
length of time outstanding
The allowance method estimates
uncollectible accounts