Explan options What is the effect of bad debts on revenue recognition?a. Bad debts must be of a remote likelihood in order to recognize revenue.b. Bad debts are deducted from revenue to calculate net revenue on the income statement, similarto sales returns.c.The seller must believe it is probable it will collect the amounts it is entitled to collect.d.Bad debts are ignored when determining whether to recognize revenue, but recognized as anexpense on the income statement.

As per IAS/IFRS 15 Revenue From contract with customers, A Bad debt is an uncollectible accounts…

What is the effect of bad debts on revenue recognition? a. Bad debts must be of a remote likelihood in order to recognize revenue. b. Bad debts are deducted from revenue to calculate net revenue on the income statement, simila to sales returns. c.The seller must believe it is probable it will collect the amounts it is entitled to collect. d.Bad debts are ignored when determining whether to recognize revenue, but recognized as an expense on the income statement.

What is the effect of bad debts on revenue recognition? a. Bad debts must be of a remote likelihood in order to recognize revenue. b. Bad debts are deducted from revenue to calculate net revenue on the income statement, simila to sales returns. c.The seller must believe it is probable it will collect the amounts it is entitled to collect. d.Bad debts are ignored when determining whether to recognize revenue, but recognized as an expense on the income statement.

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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The allowance for doubtful accounts, which appears as a deduction from accounts receivable on a statement of financial position and which is based on an estimate of bad debts, is an application of which of the following? a. Revenue recognition principle. b. Materiality quality. c. Consistency characteristic. d. Expense recognition principle.
The allowance for doubtful accounts, which appears as a deduction from accounts receivable on a statement of financial position and which is based on an estimate of bad debts, is an application of which of the following? a. Expense recognition principle. b. Consistency characteristic. c. Materiality quality. O d. Revenue recognition principle.
Using the allowance method, is Bad Debt Expense recognized in the period in which ( a ) sales related to the uncollectible account were made or ( b ) the seller learns that thecustomer is unable to pay?
Which of the following statements is NOT true regarding gift card revenue recognition? O When a gift card is sold, the seller establishes a liability on its balance sheet. O Breakage can only be recognized as revenue to the extent that it is probable a reversal will not be necessary. O Breakage refers to the unused portion of gift cárd balances. O The amount received from the sale of gift cards is required to be recognized as revenue when the gift cards are sold.
The expense recognition a. requires that all credit losses be recorded when an individual customer cannot pay b. necessitates the recording of an estimated amount for bad debts. c. results in the recording of a known amount for bad debt losses. d. is not involved in the decision of when to expense a credit loss
Which of the following would not overstate current-period net income?a. Capitalizing an expenditure that should be expensed.b. Failing to record a liability as an expense.c. Failing to record a check paying an item in Vouchers Payable.d. All of the above would overstate net income.
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.
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 accounting concept is applied when an entry is made for provision for bad debts? A. Going- concern B. Materiality C. Accruel D. Historic cost
Distinguish the difference between Bad Debts and Provision for Doubtful Debts, indicating the accounting treatment given to an increase/decrease in the Provision for Doubtful Debts and the impacts generally on Income Statements and Statements of Financial Statements.
Which of the following accounts are characterized as a "contra" account? (Select ALL that apply) O Equipment O Deferred Revenue OAccumulated Depreciation O Accounts Payable O Depreciation Expense O Sales Allowances O Sales return O Allowance for Uncollectible A/R O Bad Debt Expense O Accounts Receivable O Notes Payable O Cost of Goods Sold ASUS
Which of the following is a limitation of the direct write-off method of accounting for uncollectibles? a. The direct write-off method overstates assets on the balance sheet. b. The direct write-off method does not match expenses against revenue very well. c. The direct write-off method does not set up an allowance for uncollectibles. d. All of the above