Accounting Chapter 14 True or False
False
A business having a $300.00 credit balance in Allowance for Uncollectible Accounts and estimating its uncollectible accounts to be $4,000.00 would record a $4,300.00 credit to Allowance for Uncollectible Accounts
False
A business usually knows at the end of the fiscal year which customer accounts will become uncollectible
True
A note provides the business with legal evidence of the debt should it be necessary to go to court to collect
True
Interest income is classified as an Other Revenue account
False
Interest income should not be recorded on a dishonored note receivable
True
Interest rates are stated as a percentage of the principal
True
The account Allowance for Uncollectible Accounts has a normal credit balance
False
The account Allowance for Uncollectible Accounts is reported on the income statement
False
The accounting concept Conservatism is applied when the process of making accounting estimates is free from bias
True
The adjusting entry for uncollectible accounts does not affect the balance of the Accounts Receivable account
True
The book value of accounts receivable must be a reasonable and unbiased estimate of the money the business expects to collect in the future
True
The direct write-off method of accounting for uncollectible accounts does not comply with GAAP
False
The expense of an uncollectible account should be recorded in the accounting period that the account becomes uncollectible.
True
The method for calculating interest is the same for notes payable and notes receivable
False
The percent of each age group of an accounts receivable aging that is expected to become uncollectible is determined by the Securities and Exchange Commission
True
The percent of sales method of estimating uncollectible accounts expense assumes that a portion of every dollar of sales on account will become uncollectible
False
Total assets are reduced when a business accepts a note receivable from a customer needing an extension of time to pay an account receivable
False
When a customer account is written off under the allowance method, book value of Accounts Receivable decreases
True
When a previously written-off account is collected, Accounts Receivable is both debited and credited for the amount collected
False
When an account is written off as uncollectible, the business sends the customer a credit memo