Question 1

The Allowance for Doubtful accounts is shown on the income statement.

Accepted Answer

A) True 
 B)False

Question 2

Using the income statement approach,the balance in Allowance for Doubtful Accounts is ignored.

Accepted Answer

A) True 
 B)False

Question 3

Use the account code numbers to identify how the following transactions would be journalized.
[1]Cash
[2]Accounts Receivable
[3]Allowance for Doubtful Accounts
[4]Bad Debts Expense,
[5]Bad Debts Recovered
-Wrote off an account using the allowance method.
Debit account ________ Credit account ________

Accepted Answer

The answer of Use the account code numbers to identify...

Question 4

What type of account is a Bad Debts Expense?

Accepted Answer

A) Asset 
B) Contra-asset 
C) Expense 
D) Liability 
A) Asset 
B) Contra-asset 
C) Expense 
D) Liability

Question 5

If the allowance method of accounting for uncollectible receivables is used,what general ledger account is credited to write off a customer's account as uncollectible?

Accepted Answer

A) Bad Debts Expense 
B) Accounts Receivable 
C) Accounts Payable 
D) Bad Debts Recovered 
A) Bad Debts Expense 
B) Accounts Receivable 
C) Accounts Payable 
D) Bad Debts Recovered

Question 6

When all of the cash for an account previously written off under the direct write-off method is unexpectedly collected,the correct entry would be:

Accepted Answer

A) debit Bad Debt Expense and credit Accounts Receivable. 
B) debit Accounts Receivable and credit Bad Debt Expense. 
C) debit Cash and credit Accounts Receivable. 
D) dependent on the period in which the cash was collected. 
A) debit Bad Debt Expense and credit Accounts Receivable. 
B) debit Accounts Receivable and credit Bad Debt Expense. 
C) debit Cash and credit Accounts Receivable. 
D) dependent on the period in which the cash was collected.

Question 7

In the direct write-off method,writing off an account causes:

Accepted Answer

A) an increase in expense. 
B) an increase in Accounts Receivable. 
C) a decrease in the Allowance account. 
D) an increase in Liabilities. 
A) an increase in expense. 
B) an increase in Accounts Receivable. 
C) a decrease in the Allowance account. 
D) an increase in Liabilities.

Question 8

A company is not able to reasonably estimate its bad debts expense.The method it may use is:

Accepted Answer

A) net realizable value method. 
B) direct write-off method. 
C) aging method. 
D) income statement method. 
A) net realizable value method. 
B) direct write-off method. 
C) aging method. 
D) income statement method.

Question 9

A notice was received from Mary,who is a customer,that she was bankrupt.The entry to write-off her balance of $1,250 would be:

Accepted Answer

A)  $\begin{array} { | c | l | } 
\hline \text { Allowance for Doubtful Accounts } & 1,250 \
\hline \text { Accounts Receivable/Mary } & 1,250 \
\hline
\end{array}$ 
B)  $\begin{array} { | c | l | } 
\hline \text { Accounts Receivable/Mary } & 1,250 \
\hline \text { Bad Debt Expense } & 1,250 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|lll|}
 \hline \text { Bad Debt Expense } & 1,250\
\hline \text { Allowance for Doubtful Accounts } & 1,250\
\hline 
\end{array}$ 
D) None of the above 
A)  $\begin{array} { | c | l | } 
\hline \text { Allowance for Doubtful Accounts } & 1,250 \
\hline \text { Accounts Receivable/Mary } & 1,250 \
\hline
\end{array}$ 
B)  $\begin{array} { | c | l | } 
\hline \text { Accounts Receivable/Mary } & 1,250 \
\hline \text { Bad Debt Expense } & 1,250 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|lll|}
 \hline \text { Bad Debt Expense } & 1,250\
\hline \text { Allowance for Doubtful Accounts } & 1,250\
\hline 
\end{array}$ 
D) None of the above

Question 10

The net realizable value of a company's Accounts Receivables is:

Accepted Answer

A) increased at the time of a specific write-off. 
B) decreased at the time of a specific write-off. 
C) unchanged at the time of a specific write-off. 
D) the guaranteed amount the company will collect from its customers. 
A) increased at the time of a specific write-off. 
B) decreased at the time of a specific write-off. 
C) unchanged at the time of a specific write-off. 
D) the guaranteed amount the company will collect from its customers.

Question 11

Using the balance sheet approach,the balance in Allowance for Doubtful Accounts is taken into consideration when finding the adjustment.

Accepted Answer

A) True 
 B)False

Question 12

What would be the basis for the following journal entry if it appears on Travis Company records? Travis uses the allowance method. $\begin{array} { | c | l | } 
\hline \text { Allowance for Doubtful Accounts } & 150 \
\hline \text { Accounts Receivable -Tim Morgan } & 150 \
\hline
\end{array}$

Accepted Answer

A) The firm is estimating its uncollectible accounts. 
B) The firm is writing off a specific account. 
C) The firm is making a collection of a previously written-off account. 
D) It is a reversing entry. 
A) The firm is estimating its uncollectible accounts. 
B) The firm is writing off a specific account. 
C) The firm is making a collection of a previously written-off account. 
D) It is a reversing entry.

Question 13

For each of the following, identify in column 1 the category to which the account belongs, in column 2 the normal balance for the account, in column 3 the financial statement that the account in which the account balance is reported, and in column 4 the account's nature.
-$\begin{array} { | l | l | l | l | l | } 
\hline & \text { Column 1 } & \text { Column 2 } & \text { Column 3 } & \text { Column 4 } \
\hline \text { Cash } & & & & \
\hline
\end{array}$

Accepted Answer

The answer of For each of the following, identify in...

Question 14

Prepare the adjusting journal entry of Bad Debts Expense from the following information using the income statement approach.
 $\begin{array}{llcc}
  \text {  Net Sales for the year} &\$475,000  \
 \text {Balance in the allowance account  } &900 \text {credit}\
 \text {Estimated percentage of sales uncollectible  } &2\%\
 \text { Estimated uncollectible accounts-aging } &\$2,500\
\end{array}$

Accepted Answer

The answer of Prepare the adjusting journal entry of Bad...

Question 15

The balance sheet approach estimates a percentage of Accounts Receivable that is uncollectible.

Accepted Answer

A) True 
 B)False

Question 16

The Allowance for Doubtful Accounts is shown on the balance sheet as a contra-asset.

Accepted Answer

A) True 
 B)False

Question 17

Use the account code numbers to identify how the following transactions would be journalized.
[1]Cash
[2]Accounts Receivable
[3]Allowance for Doubtful Accounts
[4]Bad Debts Expense,
[5]Bad Debts Recovered
-Increase the allowance for the estimated bad debts using the percentage of receivables.
Debit account ________ Credit account ________

Accepted Answer

The answer of Use the account code numbers to identify...

Question 18

What would be the basis for the following entry on a firm's records? $\begin{array} { | c | l | } 
\hline \text { Bad Debt Expense } & 150 \
\hline \text { Accounts Receivable } & 150 \
\hline
\end{array}$

Accepted Answer

A) The firm is using the direct write-off method. 
B) The firm is writing off an uncollectible account. 
C) The firm is not using the allowance method for writing off accounts. 
D) All of these answers are correct. 
A) The firm is using the direct write-off method. 
B) The firm is writing off an uncollectible account. 
C) The firm is not using the allowance method for writing off accounts. 
D) All of these answers are correct.

Question 19

The amount of Accounts Receivable a company estimates it will collect is the:

Accepted Answer

A) Gross Accounts Receivable. 
B) Bad Debts Allowance. 
C) Net Realizable Value. 
D) Accounts Receivable Allowance. 
A) Gross Accounts Receivable. 
B) Bad Debts Allowance. 
C) Net Realizable Value. 
D) Accounts Receivable Allowance.

Question 20

Gross Accounts Receivable is $10,000.Allowance for Doubtful Accounts has a credit balance of $200.Net sales for the year are $150,000.In the past,2% of sales had proved uncollectible.What would be the adjusted balance of the Allowance account under the income statement approach?

Accepted Answer

A) $3,200 
B) $2,800 
C) $1,400 
D) $3,000 
A) $3,200 
B) $2,800 
C) $1,400 
D) $3,000

Exam 13: Accounting for Bad Debts

The Allowance for Doubtful accounts is shown on the income statement.

Using the income statement approach,the balance in Allowance for Doubtful Accounts is ignored.

What type of account is a Bad Debts Expense?

If the allowance method of accounting for uncollectible receivables is used,what general ledger account is credited to write off a customer's account as uncollectible?

When all of the cash for an account previously written off under the direct write-off method is unexpectedly collected,the correct entry would be:

In the direct write-off method,writing off an account causes:

A company is not able to reasonably estimate its bad debts expense.The method it may use is:

A notice was received from Mary,who is a customer,that she was bankrupt.The entry to write-off her balance of $1,250 would be:

The net realizable value of a company's Accounts Receivables is:

Using the balance sheet approach,the balance in Allowance for Doubtful Accounts is taken into consideration when finding the adjustment.

What would be the basis for the following journal entry if it appears on Travis Company records? Travis uses the allowance method. Allowance for Doubtful Accounts 150 Accounts Receivable -Tim Morgan 150

Prepare the adjusting journal entry of Bad Debts Expense from the following information using the income statement approach. Net Sales for the year \4 75,000 Balance in the allowance account 900 credit Estimated percentage of sales uncollectible 2\% Estimated uncollectible accounts-aging \2 ,500

The balance sheet approach estimates a percentage of Accounts Receivable that is uncollectible.

The Allowance for Doubtful Accounts is shown on the balance sheet as a contra-asset.

What would be the basis for the following entry on a firm's records? Bad Debt Expense 150 Accounts Receivable 150

The amount of Accounts Receivable a company estimates it will collect is the:

Gross Accounts Receivable is $10,000.Allowance for Doubtful Accounts has a credit balance of $200.Net sales for the year are $150,000.In the past,2% of sales had proved uncollectible.What would be the adjusted balance of the Allowance account under the income statement approach?

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: The Beginning of the Payroll Process

Paying,recording,and Reporting Payroll and Payroll Taxes: The Conclusion of the Payroll Process

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property, plant, equipment, and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values, dividends, treasury Stocks, and Retained Earnings

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

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