Accounting Chapter 14 Review

With each sale on account, a business takes the risk that the customer will never pay the amount owed.

• True

• False

Accurate financial reporting requires that expenses be recorded in the same fiscal period in which the expenses contribute to earning revenue. Which accounting concept is this?

Some businesses refer to uncollectible accounts as __.

• cliff hangers

• bad debts

• unpaid debts

• uncollectible debts

When journalizing the adjusting entry to record uncollectible accounts what account is credited?

• Uncollectible Accounts Expense

• Accounts Receivable

• Allowance for Uncollectible Accounts

• Notes Receivable

Allowance for Uncollectible Accounts is related to which account?

• Accounts Receivable

• Notes Receivable

• Cash

• Accounts Payable

The percent of sales method assumes that a percent of credit sales will become uncollectible.

• True

• False

The source document for the uncollectible accounts adjustment is a(n) __.

• Memorandum

• Receipt

• Check

• There isn't a source document

When a customer account is determined to be uncollectible, a journal entry is made to cancel the uncollectible amount from Accounts Payable and the vendor account.

• True

• False

Using cash as the primary medium of exchange for business transactions would be an application of which accounting concept?

• Realization of Revenue

• Unit of Measurement

• Full Disclosure

• Consistent Reporting

Each unit of ownership in a corporation is known as a

• unit of share

• share of stock

• dividend

• stock portfolio