An accounting procedure that (1) estimates and reports bad debts expense from credit sales during the period the sales are recorded, and (2) reports accounts receivable at the estimated amount of cash to be collected is the: A. Allowance method of accounting for bad debts. B. Aging of notes receivable. C. Adjustment method for uncollectible debts. D. Direct write-off method of accounting for bad debts. E. Cash basis method of accounting for bad debts.

An accounting procedure that (1) estimates and reports bad debts expense from credit sales during the period the sales are recorded, and (2) reports accounts receivable at the estimated amount of cash to be collected is the: A. Allowance method of accounting for bad debts. B. Aging of notes receivable. C. Adjustment method for uncollectible debts. D. Direct write-off method of accounting for bad debts. E. Cash basis method of accounting for bad debts.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 9MC: Which method delays recognition of bad debt until the specific customer accounts receivable is...

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Which method delays recognition of bad debt until the specific customer accounts receivable is identified? A. income statement method B. balance sheet method C. direct write-off method D. allowance method
Which of the following estimation methods considers the amount of time past due when computing bad debt? A. balance sheet method B. direct write-off method C. income statement method D. balance sheet aging of receivables method
Which account type is used to record bad debt estimation and is a contra account to Accounts Receivable?
Each time an account is written off under the direct write-off method, Bad Debt Expense is debited.
Which of the following concepts relates to using the allowance method in accounting for accounts receivable? Bad debt expense is management's determination of which accounts will be sent to the attorney for collection. а. O b. Bad debt expense is an estimate that is based on historical and prospective information. Ос. Bad debt expense is an estimate that is based only on an analysis of the receivables ageing. O d. Bad debt expense is based on the actual amounts determined to be uncollectible.
Which of the following best describes the objective of estimating bad debt expense with the percentage of credit sales method? a.To estimate the amount of bad debt expense based on an aging of accounts receivable. b.To estimate bad debt expense based on a percentage of credit sales made during the period. c.To determine the amount of uncollectible accounts during a given period. d.To facilitate the use of the direct write-off method.
Which of the following is true? a. When individual customers’ accounts have credit balances of material amounts, these amounts must be deducted from the debit balance in other customers’ accounts on the statement of financial position. b. Sales revenue is increased by a recovery of an account previously written off. c. It is appropriate to measure the impairment of receivables based on recognized sales and other revenues. d. A noninterest-bearing promissory note is measured on the statement of financial position at face value less the amount of unamortized discount.
When using the allowance method for accounting for bad debts, accounts receivable is reported on the balance sheet at the expected net realizable value. When a particular receivable from a customer ultimately is determined to be uncollectible and is written off, the recording of this event will Group of answer choices A)decrease the net realizable value of the accounts receivable. B)have an effect that is not determinable from the information given. C)increase the net realizable value of the accounts receivable. D)decrease total current assets. e)None of the above
A method of estimating bad debts that focuses on the income statement rather than the balance sheet is the allowance method based on: a. direct write-offb. aging the trade receivable accountsc. credit salesd. the balance in the trade receivable accounts
The Allowance for Doubtful Accounts represents: a. The amount of uncollected accounts written off to date b. Bad debt losses incurred in the current period c. The difference between the recorded value of accounts receivable and the net realizable value of accounts receivable d. The difference between total sales made on credit and the amount collected from those credit sales
Using the following key, identify the effects of the following transactions or conditions on the various financial statement elements: I = increases; D = decreases; NE = no effect. A.credit sale b. Collection of a portion of accounts receivable c. Estimate of bad debts d. Write-off of a specific uncollectible account
Discuss the (a) focus and (b) financial statement emphasis of the percent of sales and the analysis of receivables methods of estimating bad debts.