Chap 14: Allowance for impairment of trade receivables

Impairment loss on trade receivables is reported as an ___ in the Income Statement. A business record loss in the ___ period as the business records credit sales revenue applying ___concept.

• expense, different , matching

• income, different , matching

• expense, same , prudence

• expense, same , matching

Objective evidences that debt is unlikely to be collectible:

• Debt is overdue despite repeated reminders to debtor to pay up

• Debtor is not experiencing financial difficulties

• Debtor gives a dishonoured cheque after much effort to collect debt

• Debtor is not contactable and is no longer in operation

Allowance for impairment of trade receivables represents the __ presented as a __ against trade receivables on Balance Sheet.

• amount of trade receivables that is likely to be collectible, deduction

• amount of trade receivables that is likely to be uncollectible, addition

• amount of trade receivables that is likely to be uncollectible, deduction

E____ of uncollectible debt is recorded in the ___ account of allowance for impairment of trade receivables.

• Estimation, contra-asset

• Expectation, contra-asset

• Estimation, asset

Impairment loss on trade receivables is matched against the credit sales revenue in the same financial period.

This is in line with __ concept.

• Matching

• Prudence

• Accrual

• Accounting period

Uncertainty whether amount owed may be collected ultimately objective evidence that debtor may not pay up > likely loss > adjust and record the likely loss though it is not confirmed yet.

This is in line with __ concept.

• Matching

• Prudence

• Objectivity

• Going concern

This shows the reporting of ____ in the ___.

• Impairment loss on trade receivables, Balance Sheet

• Trade receivables, Balance Sheet

• Impairment loss on trade receivables, Income Statement

For Write-off of trade receivables: what is the effect on profit?

• No effect

• Increase in profit

• Decrease in profit

Recording an impairment loss on trade receivables will cause profit to ____.

• remain unchanged

• increase

• decrease

When there is an increase in allowance for impairment of trade receivables , it implies ____.

• impairment loss on trade receivables

• impairment loss on trade receivables (reversal)

• debtors need to be wrote off