Chapter 6 accounting

the bank will show interest earned on customer's bank statements as a ______.

credit, because a deposit is a liability from the bank's point of view

A customer that was written off now pays. The journal entry recorded to reverse this previously written-off amount is recorded as a ______.

debit Accounts receivable and credit Allowance for doubtful accounts

From the bank's perspective, the bank will show a bank service charge as a _____.

debit, because a withdrawal decreases its liability from the bank's point of view

A bank service charge should be a(n) ______ on a bank reconciliation.

deduction from the book balance

Which of the following would be added to the cash balance per the bank statement in a bank reconciliation?

deposits in transit

A company's Bad Debt Expense reports the ______.

estimated amount of this period's credit sales that customers will fail to pay

Since accounting numbers, such as the allowance for doubtful accounts balance, are based on ,________ financial statements are susceptible to management manipulation.

judgment

NSF checks from customers should be a(n) ______ on a bank reconciliation

subtraction from the book balance

If a company records a transaction before the bank records the same transaction, this is called a/an ______ difference

timing

bank reconciliation

A bank reconciliation is the process of matching the balances in an entity's accounting records for a cash account to the corresponding information on a bank statement.

Using the allowance method, which is the correct adjusting journal entry to record bad debt expense?

Debit Bad Debt Expense and credit Allowance for Doubtful Accounts

This month's bank statement shows interest earned of $45. How would this item be treated on the bank reconciliation?

It would be added to the book balance.

Deposits in transit are

added to the bank balance

In a bank reconciliation, interest revenue earned on the bank account balance is ______.

added to the bank balance

Allowing credit cards, returns or discounts for early payment affects the recording of ______.

net sales revenue

A bank service charge should be a(n) ______ on a bank reconciliation.

over time as the service is provided

The expense associated with the estimate of the amount of accounts receivable that may not be collected during the year is referred to as ______.

bad debt expense

The line item Trade accounts receivable, net of allowances will be found on the ______.

balance sheet

FOB destination means that goods are owned by the buyer as soon as ______.

they arrive at the buyer's place of business

bad debt expense

Bad debts expense often refers to the loss that a company experiences because it sold goods or provided services and did not require immediate payment.

If the accounts receivable balance increased then cash collected from customers was ________ the sales for the accounting period.

less than

A timing difference in cash occurs when a company records a transaction either before or after the bank records the same transaction. A bank __________ is used to explain these timing differences

reconciliation