acct

Which of the following are true regarding the allowance method for recording​ uncollectibles?

A contra asset account related to accounts receivable is used to hold the estimated amount of uncollectible accounts/Bad debts expense for the period is estimated by recording an adjusting entry at the end of the period

When a business records bad debts expense using the direct​ write-off method, the journal entry to record the​ write-off includes

A credit to the​ customer's accounts receivable account

When a business unexpectedly receives payment from a customer whose account was previously written off

The​ customer's accounts receivable account is first increased with a​ debit, then reduced with a credit/ Cash is increased with a debit/ Bad Debts Expense is decreased with a credit

A method of estimating uncollectible receivables by determining the balance of the Allowance for Bad Debts account based on how long each individual accounts receivable balance has been outstanding is called the

aging of receivables

Which of the following is not one of the three most common ways to estimate bad debts expense using the allowance method

aging of sales method

When bad debts expense is estimated and recorded at the end of the period using the allowance method

bad debts expense is increased with a debit

Under the allowance​ method, bad debts expense is not recorded when a​ customer's account is written off because

bad debts expense is only estimated and the estimate is recorded only at the end of an accounting period

Bad Debts Expense

is the cost that arises when a business is unable to collect from a credit customer.

Under the allowance​ method, businesses estimate their bad debts expense by considering

its past history of uncollectible accounts; the industry it operates in; the state of the economy

The net amount a business expects to collect from its accounts receivable is called the

net realizable value

When writing off a​ customer's account using the allowance method

the allowance for bad debts account is decreased with a debit

A limitation of the direct​ write-off method is that it violates the matching principle by not recording the bad debts expense in the same fiscal period as the related revenue.

true

The allowance method for recording uncollectibles is allowed by Generally Accepted Accounting Principles.

true

The direct​ write-off method is mainly used by large public companies to account for uncollectible accounts

true

The direct​ write-off method is required according to Generally Accepted Accounting Principles.

true

The net realizable value of accounts receivable after a​ customer's account is written of is the same dollar amount before the​ customer's account was written off.

true

When using the direct​ write-off method, bad debts expense is recorded on the day the business determines the account is deemed uncollectible.

true