Question 1

San Francisco Tours collected $90 on an account that had been directly written off the previous year. The journal entry to record the transaction would include:

Accepted Answer

A) a debit to Allowance for Doubtful Accounts. 
B) a debit to Bad Debts Recovered. 
C) a credit to Bad Debts Recovered. 
D) a credit to Bad Debts Expense. 
A) a debit to Allowance for Doubtful Accounts. 
B) a debit to Bad Debts Recovered. 
C) a credit to Bad Debts Recovered. 
D) a credit to Bad Debts Expense.

Question 2

The entry to adjust for bad debts was ignored. 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 3

After having written off a customer under the direct write-off method, the account will be reopened when the customer:

Accepted Answer

A) sends the full amount to pay off the account. 
B) sends any amount to pay on their account. 
C) pays the collection bureau. 
D) none of the above 
A) sends the full amount to pay off the account. 
B) sends any amount to pay on their account. 
C) pays the collection bureau. 
D) none of the above

Question 4

Evaluate the differences of the effect on the financial statements between the income statement approach and the balance sheet approach for estimating bad debts expense on the financial statement presentation.

Accepted Answer

The income statement approach places its

Question 5

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 6

Determine the estimated realizable (collectable)value:
Bad debts are estimated to be 3% of net sales.
   $ ________

Accepted Answer

The answer of Determine the estimated realizable (collectable)value:
Bad debts are...

Question 7

The two methods of accounting for uncollectible receivables are the direct write-off method and the:

Accepted Answer

A) equity method. 
B) allowance method. 
C) interest method. 
D) cost method. 
A) equity method. 
B) allowance method. 
C) interest method. 
D) cost method.

Question 8

Empire has a credit balance of $750 in its Allowance for Doubtful Accounts. The balance it the Accounts Receivable account is $80,500, with $2,415 estimated to be uncollectible after aging the accounts. Under the balance sheet approach, the debit to Bad Debt Expense will be:

Accepted Answer

A) $2,415. 
B) $3,165. 
C) $1,665. 
D) $750. 
A) $2,415. 
B) $3,165. 
C) $1,665. 
D) $750.

Question 9

Town and Country Saddle learns the account receivable for a customer is uncollectible. The journal entry under the allowance method to write-off an account is to:

Accepted Answer

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

Question 10

Indy Sport and Hobby's Allowance for Doubtful Accounts had an unadjusted credit balance of $400. The manager estimates that $900 of the Accounts Receivable is uncollectible. Using the balance sheet approach, the year-end adjusting entry for Bad Debts Expense:

Accepted Answer

A) includes a credit to the Bad Debt Expense account for $500. 
B) includes a debit to the Bad Debts Expense account for $900. 
C) includes a credit to the Bad Debts Expense account for $1,300. 
D) includes a debit to the Bad Debts Expense account for $500. 
A) includes a credit to the Bad Debt Expense account for $500. 
B) includes a debit to the Bad Debts Expense account for $900. 
C) includes a credit to the Bad Debts Expense account for $1,300. 
D) includes a debit to the Bad Debts Expense account for $500.

Question 11

Which financial statement reports Allowance for Doubtful Accounts?

Accepted Answer

A) Balance sheet 
B) Income statement 
C) Statement of owner's equity 
D) None of these answers is correct. 
A) Balance sheet 
B) Income statement 
C) Statement of owner's equity 
D) None of these answers is correct.

Question 12

If a recovery of a written-off account is made in the same year using the allowance method, the Bad Debts Recovered account would be used.

Accepted Answer

A) True 
 B)False

Question 13

A detailed analysis of Accounts Receivable to determine how long each account has been outstanding is called:

Accepted Answer

A) analyzing the Accounts Receivable. 
B) aging the uncollectible accounts. 
C) aging the Accounts Receivable. 
D) taking a percentage of sales on account. 
A) analyzing the Accounts Receivable. 
B) aging the uncollectible accounts. 
C) aging the Accounts Receivable. 
D) taking a percentage of sales on account.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

When a customer's account is written off:

Accepted Answer

A) net realizable value of the Accounts Receivable increases. 
B) net realizable value of the Accounts Receivable decreases. 
C) net realizable value of the Accounts Receivable remains the same. 
D) none of the above 
A) net realizable value of the Accounts Receivable increases. 
B) net realizable value of the Accounts Receivable decreases. 
C) net realizable value of the Accounts Receivable remains the same. 
D) none of the above

Question 17

Using the aging method, estimated uncollectible accounts are $3,000. If the balance in the Allowance for Doubtful Accounts is a $600 credit before adjustment, what is the Bad Debts Expense adjustment for the period?

Accepted Answer

A) $3,000 
B) $600 
C) $2,400 
D) $3,600 
A) $3,000 
B) $600 
C) $2,400 
D) $3,600

Question 18

Prepare the adjusting journal entry for Bad Debts Expense from the following information using the balance sheet approach.

Accepted Answer

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

Question 19

What type of account is an Allowance for Doubtful Accounts?

Accepted Answer

A) Asset 
B) Contra-asset 
C) Revenue 
D) Contra-revenue 
A) Asset 
B) Contra-asset 
C) Revenue 
D) Contra-revenue

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 13: Accounting for Bad Debts

San Francisco Tours collected $90 on an account that had been directly written off the previous year. The journal entry to record the transaction would include:

The entry to adjust for bad debts was ignored. This error would cause:

After having written off a customer under the direct write-off method, the account will be reopened when the customer:

Evaluate the differences of the effect on the financial statements between the income statement approach and the balance sheet approach for estimating bad debts expense on the financial statement presentation.

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

Determine the estimated realizable (collectable)value: Bad debts are estimated to be 3% of net sales. $ ________

The two methods of accounting for uncollectible receivables are the direct write-off method and the:

Empire has a credit balance of $750 in its Allowance for Doubtful Accounts. The balance it the Accounts Receivable account is $80,500, with $2,415 estimated to be uncollectible after aging the accounts. Under the balance sheet approach, the debit to Bad Debt Expense will be:

Town and Country Saddle learns the account receivable for a customer is uncollectible. The journal entry under the allowance method to write-off an account is to:

Indy Sport and Hobby's Allowance for Doubtful Accounts had an unadjusted credit balance of $400. The manager estimates that $900 of the Accounts Receivable is uncollectible. Using the balance sheet approach, the year-end adjusting entry for Bad Debts Expense:

Which financial statement reports Allowance for Doubtful Accounts?

If a recovery of a written-off account is made in the same year using the allowance method, the Bad Debts Recovered account would be used.

A detailed analysis of Accounts Receivable to determine how long each account has been outstanding is called:

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

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

When a customer's account is written off:

Using the aging method, estimated uncollectible accounts are $3,000. If the balance in the Allowance for Doubtful Accounts is a $600 credit before adjustment, what is the Bad Debts Expense adjustment for the period?

Prepare the adjusting journal entry for Bad Debts Expense from the following information using the balance sheet approach.

What type of account is an Allowance for Doubtful Accounts?

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

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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