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Ch 14 Accounting

QuestionAnswer
The adjusting entry for uncollectible accounts reduces the balance of the Accounts Receivable account. false
When using the allowance method, writing off an uncollectible account does not change the net realizable value of accounts receivable true
After our customer signs a Promissory Note, what account do we transfer the balance of their debt to Notes Receivable
The accounting concept Neutrality is applied when the process of making accounting estimates is free from bias. true
A promissory note provides the business with legal evidence of the debt should it be necessary to go to court to collect true
Does the book value of accounts receivable differ before and after writing off an account? remains the same
A business usually knows at the end of the fiscal year which customer accounts will become uncollectible. false
Total assets are reduced when a business accepts a note receivable from a customer needing an extension of time to pay an account receivable. false
Crediting the estimated value of uncollectible accounts to a contra account allowance method
The account Allowance for Uncollectible Accounts is reported on the income statement. Interest Income (Allowance for Uncollectible Accounts is reported in balance sheet)
The book value of accounts receivable must be a reasonable and unbiased estimate of the money the business expects to collect in the future. true
Interest income is classified as other revenue
Canceling the balance of a customer account because the customer does not pay Writing off an account
A written and signed promise to pay a sum of money at a specified time. Promissory Note
The original amount of a note, sometimes referred to as the face amount. Principle
The amount of accounts receivable a business expects to collect Net realizable value
The percentage of the principal that is due for the use of the funds secured by a note Interest Rate
The interest earned on money loaned Interest Income
The difference between an asset’s account balance and its related contra account book value
Analyzing accounts receivable according to when they are due. Aging of Accounts Receivable
Why is a customer account reopened when the account is paid after being previously written off? to show accurate credit history and the account was eventually paid
A business having a $400.00 debit balance in Allowance for Uncollectible Accounts and estimating its uncollectible accounts using accounts receivable aging to be $5,000.00 would record a $5,400.00 credit to Allowance for Uncollectible Accounts. true
The direct write-off method complies with generally accepted accounting principles true-the write-off method complies direct write-off does not because it makes revenue and expenses not match
The expense of an uncollectible account should be recorded in the accounting period that the account becomes uncollectible. false
Interest rates are stated as a percentage of the principal. true
The allowance method of accounting for uncollectible accounts does not comply with generally accepted accounting principles false
When a customer account is written off under the allowance method, the book value of accounts receivable decreases false
What’s another name for uncollectible accounts bad debt
The account Allowance for Uncollectible Accounts has a natural (normal) credit balance
The percent of each age group of an accounts receivable aging that is expected to become uncollectible is determined by generally accepted accounting principles Securites and Exchange Commision
Created by: 114581
 

 



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