ACC 201 Chapter 8

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20 Questions - Developed by: Karli - Developed on: - 4.387 taken

  • 1
    Trade receivables occur when two companies trade or change notes receivables
  • 2
    Other receivables include noontide receivables such as loans to company officers
  • 3
    Both accounts receivable and notes receivable represent claims that are expected to be collected in cash
  • 4
    Receivables are valued and reported in the balance sheet at their gross amount less any sales returns and allowances and less any cash discounts
  • 5
    The three primary accounting problems with accounts receivable are: (1) recognizing, (2) depreciating, and (3) disposing
  • 6
    Accounts reliable are the result of cash and credit sales
  • 7
    If a retailer assesses a finance charge on the amount owed by a customer, Accounts Receivable is debited for the amount of the interest
  • 8
    If a company uses the allowance method to account for uncollectible accounts, the entry to write off an uncollectible account only invoices balance sheet accounts
  • 9
    The percentage of receivables basis of estimating unexpected uncollectible accounts emphasizes income statement relationships
  • 10
    Under the direct write-off method, no attempt is made to match bad debts expense to sales revenues in the same accounting period
  • 11
    Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible
  • 12
    Allowance for Doubtful Accounts is a contra asset account
  • 13
    Cash realizable value is determined by subtracting Allowance for Doubtful Accounts from net sales
  • 14
    Generally accepted accounting principles require that the direct write-off method be used for financial reporting purposes if it is also used for tax purposes
  • 15
    Under the allowance method, Bad Debts Expense is debited when an account is deemed uncollectible and must be written off
  • 16
    Under the allowance method, the cash realizable value of receivables is the same both before and after an account has been written off
  • 17
    The percentage of sales basis for estimating uncollectible accounts always results in more Bad Debts Expense being recognized than the percentage of receivables basis
  • 18
    An aging schedule is prepared only for old accounts receivables that have been past due for more than one year
  • 19
    An aging of accounts receivable schedule is based on the premise that the longer the period an account remains unpaid, the greater the probability that it will eventually be collected
  • 20
    Sales resulting from the use of Visa and MasterCard are considered credit sales by the retailer

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