Chapter 7: Accounting for Receivables

Bad debts happen due to the following situations, except

• The debtor dies.

• The debtor cannot be traced.

• The debtor paid his debts.

• The debtor is insane.

What is the definition of account receivables?

• The amount owed to a company resulting from providing goods or services on credit.

• Coins, currency, checks, money orders and money on hand.

• The stock of goods available or held for sale in the ordinary course of business.

• Account that represents a company's obligation to pay off a short-term debt to its creditors or suppliers.

What are the accounting methods for bad debts?

• Reducing balance method

• Allowance method

• Straight line method

• Direct write-off method

When a company uses direct write-off method to record bad debts,

• Dr. Bad debts

• Dr. Allowance for doubtful debts

• Cr. Accounts Receivable

• Cr. Accounts Payable

When a company uses allowance method to record bad debts,

• Dr. Bad debts

• Dr. Allowance for doubtful debts

• Cr. Accounts Receivable

• Cr. Accounts Payable

Bad debts expense is shown in the...

• Statement of Financial Position

• Statement of Owner's Equity

• Statement of Profit or Loss

Calculate the allowance of doubtful debts at the year-end if the company used 5% of the balance in accounts receivable.

• 4000

• 4850

• 6000

• 6250

On 31 Decmber 2019, account receivable for Perniagaan Jaya is RM148,000. During the month, Mr Ahmad a debtor was declared bankrupt and could not pay his debts amounting to RM8,000. The journal entry to record the transaction is...

• Dr. Bad debts expense 8,000

• Dr. Bad debts expense 140,000

• Cr. Accounts Receivable 8,000

• Cr. Accounts Receivable 140,000

Pn. Siti has repaid RM7,800 of her old debts which were written-off in 2011. The journal entry to record the transaction is...

• Dr. Accounts Receivable

• Cr. Bad debts recovery

• Dr. Cash/Bank

• Cr. Accounts Receivable

Allowance for doubtful debts is a contra account to accounts receivable.

• True

• False