Ch 5 LEARNSMART
For accounts receivable, the longer an account is outstanding,
the more likely it will prove uncollectible.
The receivables turnover ratio indicates
the number of times during a year that the average accounts receivables were collected.
Assume Company X is in its fifth year of operation. Analyze the following schedule. What conclusion can be drawn from the following schedule?
the target amount in allowance for uncollectible accounts is $25,500.
The direct write-off method is used when
uncollectible accounts are not anticipated or are immaterial.
Which method of accounting requires estimating bad debt expense and recording the expense in the same period as the related revenue?
Allowance method
Mark records a journal entry with a debit to Bad debt Expense and a credit to Accounts Receivable. Mark is utilizing the:
Direct write-off method
Which method of accounting requires recognizing bad debt expense when it is determined that the customer cannot pay?
Direct write-off method
The percentage-of-receivables approach to measuring bad debt expense is referred to as _ method.
a balance sheet
The approach that considers the age of various accounts receivables to estimate uncollectible accounts is referred to as the _ method of accounts receivable.
aging, age, or ages
To record an estimate for future bad debts at the end of the period, an adjustment would be made with a credit to
allowance for uncollectible accounts.
The estimated expense for accounts that may not be collected is referred to as
bad debt expense.
The direct write—off method is required for
income tax purposes.
The percentage-of-receivables method of estimating bad debt applies _ to _.
a single percentage; accounts receivable
The allowance for uncollectible accounts is a contra account to
accounts receivable.
With the direct write-off method, the journal entry to write-off an uncollectible account includes a debit to _ and a credit to _.
bad debt expense; accounts receivable
Compared to other methods of estimating uncollectible accounts, the aging of accounts receivables method tends to
be more accurate.
Shannon Corp. uses the aging method to account for bad debt expense. Shannon determines that a customer account of $10,000 should be written off as uncollectible. The write off of the account will include
debit Allowance for Uncollectible Accounts.
The Accounts Receivable account is reduced when the seller:
determines that a specific customer account will not be collectible
Using a percentage of each period's net credit sales to estimate bad debt expense is a(n) _ _ approach to measuring bad debts.
income statement
An aging schedule classifies accounts receivable based on
length of time outstanding.
The _ ratio shows the number of times during a year that the average receivable balance is collected.
receivables turnover
The journal entry to record bad debt expense includes: (Select all that apply.)
credit to allowance for uncollectible accounts debit to bad debt expense
The income statement approach for estimating bad debts focuses on
current year's credit sales.
A formal credit arrangement between a creditor and debtor is called a(n)
note receivable.
A formal, signed credit agreement between a lender and a borrower is called a(n) _ by the lender.
note receivable.
When the direct write-off method is used, an entry for bad debt expense is required
when the account receivable is determined to be uncollectible.