Accounting Study Guide 20

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A business usually knows at the time sales are made which customer accounts will become uncollectible.

False

Accounts Receivable is debited to write off a customer account.

False

At the end of a fiscal period, the account credited to show the estimated amount of uncollectible accounts is...

Allowance for Uncollectible Accounts

Estimating the percentage of uncollectible accounts expense in the same period as the sales revenue is an application of the Realization of Revenue accounting concept.

False

The Realization of Revenue accounting concept explains why failing to collect an account at a later date than the original sale cancels the sale and reduces revenue.

False

The amount of accounts receivable that is uncollectible decreases revenue.

False

The balance of the account Allowance for Uncollectible Accounts is extended to the Income Statement Credit column of the work sheet.

False

The difference between the balance of Accounts Receivalbe and its contra account, Allowance for Uncollectible Accounts, is called book value.

False

When a customer account is written off under the allowance method, book value of accounts receivable decreases.

False

When an account is written off, the account balance is transferred to Allowance for Uncollectible Accounts.

False

Risk of loss occurs when a business sells on account.

True

A business generally sells on account to encourage sales.

True

Accounts receivable that cannot be collected are called uncollectible accounts.

True

Allowance for Uncollectible Accounts is debited to write off a customer account.

True

Allowances for Uncollectible Accounts is a contra account to its related asset account, Accounts Receivable.

True

Canceling the balance of a customer account because the customer does not pay is called writing off an account.

True

Crediting the estimated value of uncollectible accounts to a contra account is called the allowance method of recording losses from uncollectible accounts.

True

The difference between an asset's account balance and its related contra account balance is called its book value.

True

Using the percentage of total sales on account to estimate uncollectible accounts expense assumes that a portion of every sale on account dollar will become uncollectible.

True

When a previously written-off account is collected, Accounts Receivable is both debited and credited for the amount collected.

True

When an adjusting entry for uncollectible accounts expense is recorded, Allowance for Uncollectible Accounts is credited.

True

At the end of a fiscal period, the account debited to show the estimated amount of uncollectible accounts is...

Uncollectible Accounts Expense

The loss from an uncollectible account is...

a regular expense of doing business

When the allowance account in the Trial Balance column of a work sheet has a credit balance, the amount of the adjustment is...

added to the Trial Balance amount

Balance of accounts receivable less allowance for uncollectible accounts is the equation for calculating...

book value of accounts receivable

When the account Allowance for Uncollectible Accounts is used, a customer past-due account is written off as uncollectible by...

debiting Allowance for Uncollectible Accounts and crediting Accounts Rceivable and the customer account

When the percentage of total sales on account method is used, the estimated uncollectible accounts expense is calculated by...

multiplying total sales on account times the percentage

An Allowance for Uncollectible Accounts balance in the Trial Balance Credit column of a work sheet means...

previous fiscal period estimates have not yet been identified as uncollectible


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