Question: The two methods of accounting for uncollectible receivables are the allowance method and the _____.
Answer Options:
a. cost method
b. direct write-off method
c. equity method
d. interest method
Answer: B. direct write-off method 2
Question: If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer’s account as uncollectible?
Answer Options:
a. Allowance for Doubtful Accounts
b. Uncollectible Accounts Receivable
c. Accounts Receivable
d. Bad Debt Expense
Answer: D. Bad Debt Expense 3
Question: If the allowance method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer’s account as uncollectible?
Answer Options:
a. Accounts Receivable
b. Uncollectible Accounts Expense
c. Interest Expense
d. Allowance for Doubtful Accounts
Answer: D. Allowance for Doubtful Accounts 4
Question: A debit balance in Allowance for Doubtful Accounts _____.
Answer Options:
a. indicates that actual bad debt write-offs have been less than what was estimated
b. cannot occur if the percentage of receivables method is used
c. is the normal balance for that account
d. indicates that actual bad debt write-offs have exceeded previous provisions for bad debts
Answer: D. indicates that actual bad debt write-offs have exceeded previous provisions for bad debts 5
Question: The receivable that is usually evidenced by a formal, written instrument of credit is a(n) _____.
Answer Options:
a. accounts receivable
b. note receivable
c. trade receivable
d. income tax receivable
Answer: B. note receivable 6
Question: An alternative name for Bad Debt Expense is _____.
Answer Options:
a. Collection Expense
b. Uncollectible Accounts Expense
c. Doubtless Accounts Expense
d. Credit Loss Expense
Answer: B. Uncollectible Accounts Expense 7
Question: Indications that an account may be uncollectible include all of the following except the customer _____.
Answer Options:
a. files for bankruptcy
b. cannot be located
c. closes its business
d. is making small but regular payments
Answer: D. is making small but regular payments 8
Question: When the allowance method is used to account for uncollectible accounts, Bad Debt Expense is debited when _____.
Answer Options:
a. a sale is made
b. an account becomes bad and is written off
c. management estimates the amount of uncollectibles
d. a customer’s account becomes past due
Answer: C. management estimates the amount of uncollectibles 9
Question: To record estimated uncollectible receivables using the allowance method, the adjusting entry would be a _____.
Answer Options:
a. debit to Loss on Credit Sales and a credit to Accounts Receivable
b. debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts
c. debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable
d. debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts
Answer: B. debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts 10
Question: The amount of the promissory note plus the interest earned on the due date is called the _____.
Answer Options:
a. interest value
b. issuance value
c. face value
d. maturity value
Answer: D. maturity value 11
Question: Accounts Receivable is classified on the balance sheet as a _____.
Answer Options:
a. current asset
b. current liability
c. noncurrent asset
d. noncurrent liability
Answer: A. current asset 12
Question: Noncurrent receivables are reported on the balance sheet under _____.
Answer Options:
a. Property, Plant, and Equipment
b. Investments
c. Current Assets
d. None of these are correct
Answer: B. Investments 13