Accounting Semester Final Review

The allowance method of accounting for uncollectible accounts does not comply with generally accepted accounting principles.

• True

• False

When a customer account is written off under the allowance method, the book value of accounts receivable decreases.

• True

• False

A note provides a business with legal evidence of a debt in the event it becomes necessary to go to court to collect.

• True

• False

Total assets are reduced when a business accepts a note receivable from a customer needing an extension of time to pay an account receivable.

• True

• False

The book value of accounts receivable must be a reasonable and unbiased estimate of the money the business expects to collect in the future.

• True

• False

The accounting concept Neutrality is applied when the process of making accounting estimates is free from bias.

• True

• False

The expense of: an uncollectible account should be recorded in the accounting period that the account becomes uncollectible.

• True

• False

The account Allowance for Uncollectible Accounts has a natural credit balance.

• True

• False

The account Allowance for Uncollectible Accounts is reported on the income statement.

• True

• False

The percent of each age group of an accounts receivable aging that is expected to become uncollectible is determined by generally accepted accounting principles.

• True

• False