Question 1

Joe's Auto Repair estimates that approximately 3% of net credit sales are uncollectible. Joe's calculates Bad Debts Expense using the:

Accepted Answer

A) direct write-off method. 
B) income statement method. 
C) gross method. 
D) balance sheet method. 
A) direct write-off method. 
B) income statement method. 
C) gross method. 
D) balance sheet method.

Question 2

If the direct write-off method is used, the debit account to write off an uncollectible is:

Accepted Answer

A) Accounts Receivable. 
B) Bad Debt Expense. 
C) Allowance for Doubtful Accounts. 
D) Sales. 
A) Accounts Receivable. 
B) Bad Debt Expense. 
C) Allowance for Doubtful Accounts. 
D) Sales.

Question 3

The aging of Accounts Receivable is an income statement approach.

Accepted Answer

A) True 
 B)False

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

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 6

When it is possible to make a reasonable estimate of uncollectible accounts, the allowance method is preferred for financial reporting purposes.

Accepted Answer

A) True 
 B)False

Question 7

The journal entry to record the estimate of uncollectible accounts includes:

Accepted Answer

A) debit Sales; credit Bad Debts Expense. 
B) debit Bad Debts Expense; credit Accounts Receivable. 
C) debit Allowance for Doubtful Accounts; credit Bad Debts Expense. 
D) debit Bad Debts Expense; credit Allowance for Doubtful Accounts. 
A) debit Sales; credit Bad Debts Expense. 
B) debit Bad Debts Expense; credit Accounts Receivable. 
C) debit Allowance for Doubtful Accounts; credit Bad Debts Expense. 
D) debit Bad Debts Expense; credit Allowance for Doubtful Accounts.

Question 8

No entry was recorded to reinstate a bad debt when making a collection. The allowance method is being used. This error would cause:

Accepted Answer

A) total assets to be overstated. 
B) total liabilities to be understated. 
C) net income to be understated. 
D) None of these are correct. 
A) total assets to be overstated. 
B) total liabilities to be understated. 
C) net income to be understated. 
D) None of these are correct.

Question 9

The Allowance for Doubtful Accounts is listed on the balance sheet under the caption:

Accepted Answer

A) owner's equity. 
B) current liabilities. 
C) current assets. 
D) fixed assets. 
A) owner's equity. 
B) current liabilities. 
C) current assets. 
D) fixed assets.

Question 10

Prepare a partial balance sheet for the Meredith Company at December 31, 200x, from the following information:

Accepted Answer

The answer of Prepare a partial balance sheet for the...

Question 11

Aging Accounts Receivable measures:

Accepted Answer

A) days a bill has been due but not paid. 
B) months a bill has been due but not paid. 
C) sales for the year. 
D) All of these answers are correct. 
A) days a bill has been due but not paid. 
B) months a bill has been due but not paid. 
C) sales for the year. 
D) All of these answers are correct.

Question 12

The Allowance for Doubtful Accounts has a credit balance of $4,000. Net sales for the year were $800,000. Two percent is the estimated uncollectible based on net sales. Calculate the amount of the adjustment using the income statement approach.
Amount of the adjustment ________

Accepted Answer

The answer of The Allowance for Doubtful Accounts has a...

Question 13

A company uses the allowance method and expects not to collect $15,000 of sales. The journal entry to record the estimated bad debt is:

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 14

When a year-end adjustment is made for estimated bad debts:

Accepted Answer

A) net income is increased. 
B) liabilities increase. 
C) net assets increase. 
D) net assets decrease. 
A) net income is increased. 
B) liabilities increase. 
C) net assets increase. 
D) net assets decrease.

Question 15

Last year, Congo Corporation had net credit sales of $690,000 and it had uncollectible accounts of $31,050. Based on last year, what would the percent of estimated uncollectible accounts be this year?

Accepted Answer

A) 7.10% 
B) 3.55% 
C) 4.50% 
D) 45.00% 
A) 7.10% 
B) 3.55% 
C) 4.50% 
D) 45.00%

Question 16

Prepare general journal entries to record the following transactions for the Harris Company. (The company uses the balance sheet approach for recording bad debts expense.)
2010
   2011

Accepted Answer

The answer of Prepare general journal entries to record the...

Question 17

A major cost of selling goods on account could be:

Accepted Answer

A) accounts payable. 
B) cash shortages. 
C) easy credit. 
D) uncollectible accounts. 
A) accounts payable. 
B) cash shortages. 
C) easy credit. 
D) uncollectible accounts.

Question 18

What would be the basis for the following journal entry if it appears on Travis Company records? Travis uses the allowance method.

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 19

Estimating Bad Debts Expense is an example of:

Accepted Answer

A) recording accrued expense. 
B) the matching principle. 
C) the balance sheet approach. 
D) recording accrued sales. 
A) recording accrued expense. 
B) the matching principle. 
C) the balance sheet approach. 
D) recording accrued sales.

Question 20

The Allowance for Doubtful Accounts is adjusted:

Accepted Answer

A) at the end of each accounting period. 
B) each time a customer's debt is satisfied. 
C) within one year of granting credit to a customer. 
D) each time a customer is granted credit. 
A) at the end of each accounting period. 
B) each time a customer's debt is satisfied. 
C) within one year of granting credit to a customer. 
D) each time a customer is granted credit.

Exam 13: Accounting for Bad Debts

Joe's Auto Repair estimates that approximately 3% of net credit sales are uncollectible. Joe's calculates Bad Debts Expense using the:

If the direct write-off method is used, the debit account to write off an uncollectible is:

The aging of Accounts Receivable is an income statement approach.

What type of account is a Bad Debts Expense?

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

When it is possible to make a reasonable estimate of uncollectible accounts, the allowance method is preferred for financial reporting purposes.

The journal entry to record the estimate of uncollectible accounts includes:

No entry was recorded to reinstate a bad debt when making a collection. The allowance method is being used. This error would cause:

The Allowance for Doubtful Accounts is listed on the balance sheet under the caption:

Prepare a partial balance sheet for the Meredith Company at December 31, 200x, from the following information:

Aging Accounts Receivable measures:

The Allowance for Doubtful Accounts has a credit balance of $4,000. Net sales for the year were $800,000. Two percent is the estimated uncollectible based on net sales. Calculate the amount of the adjustment using the income statement approach. Amount of the adjustment ________

A company uses the allowance method and expects not to collect $15,000 of sales. The journal entry to record the estimated bad debt is:

When a year-end adjustment is made for estimated bad debts:

Last year, Congo Corporation had net credit sales of $690,000 and it had uncollectible accounts of $31,050. Based on last year, what would the percent of estimated uncollectible accounts be this year?

Prepare general journal entries to record the following transactions for the Harris Company. (The company uses the balance sheet approach for recording bad debts expense.) 2010 2011

A major cost of selling goods on account could be:

What would be the basis for the following journal entry if it appears on Travis Company records? Travis uses the allowance method.

Estimating Bad Debts Expense is an example of:

The Allowance for Doubtful Accounts is adjusted:

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

Filters