Glencoe Accounting 1 Chapter 24 Quick Quiz
Businesses that sell on credit usually expect to sell more than if they accepted only cash
True
When an account is written off as uncollectible, an explanation should be written on the account.
True
When the direct write-off method is used, accounts receivable and the customer's account in the subsidiary ledger are credited when it is determined that the charge customer is not going to pay.
True
Another term for uncollectible accounts is bad debts
True
The allowance for uncollectible accounts is classified as a contra asset account.
True
The normal balance of Allowance for Uncollectible Accounts is a credit
True
When a business sells goods or services on account, it knows which charge customers' accounts will be uncollectible.
False
Under the allowance method, Allowance for Uncollectible Accounts is debited when a charge customer's account is written off as a bad debt.
True
When a business uses the allowance method, an adjusting entry must be made.
True
If a company has net sales of $900,000 and estimates that its uncollectible accounts will be 3% of net sales, what will be the amount of the adjustment? (a) $900,000 (b) $27,000 (c) $2,700 (d) $270
(b) $27,000
Allowance for Uncollectible Accounts is all of the following except it is not (a) a contra assest account (b) listed on on the balance sheet just below accounts receivable (c) increased on the debit side (d) a valuation account
(c) increased on the debit side
Under the direct write-off method, the journal entry used to write off the account as uncollectible affects which two general ledger accounts? (a) Uncollectible Accounts Expense/ Allowance for Uncollectible Accounts (b) Uncollectible Accounts Expense/ Cash in Bank (c) Allowance for Uncollectible Accounts/ Accounts Receivable (d) Uncollectible Accounts Expense/ Accounts Receivable
(d) Uncollectible Accounts Expense/ Accounts Receivable
Large businesses with many charge customers usually use the direct write-off method of accounting for uncollectible accounts.
False
The two general ledger accounts affected by the direct write-off method of accounting for uncollectible accounts are Uncollectible Accounts Expense and Accounts Payable.
False