Accounting 2 Chapter 6

The larger the accounts receivable turnover ratio, the fewer the average number of days for payment

• True

• False

An accounts receivable turnover ratio that increases from 3.5 to 5.5 is a positive trend.

• True

• False

Analyzing accounts receivable according to when they are due is known as aging net sales

• True

• False

Two methods used to estimate uncollectible accounts expense are the percentage of sales method and the percentage of uncollectible accounts receivable method.

• True

• False

The difference between the balance of Accounts Receivable and its contra account, Allowance for Uncollectible Accounts, is the book value of accounts receivable.

• True

• False

The accounts receivable turnover ratio is a measure of collection efficiency.

• True

• False

When collection is made on an account that has been written off, two journal entries are made. One reopens the customer's account, and the other records the receipt of cash.

• True

• False

If a business carefully checks credit ratings before granting credit to customers, the business will not experience any uncollectible accounts.

• True

• False

Recording uncollectible accounts expense at the time of the amount is actually known to be uncollectible is called the allowance method of recording losses from uncollectible accounts.

• True

• False

Canceling the balance of a customer account because the customer is not expected to pay is known as writing off an account.

• True

• False