Chapter 24: Uncollectible Accounts Receivable Assessment

What is an uncollectible account (bad debt?)

• A payment received ahead of schedule.

• An account that cannot be collected and must be written off.

• A partial payment from a customer.

• An account paid in full.

Which method of handling uncollectible accounts is the only one allowed for tax purposes?

• allowance method

• direct write-off method

• percentage of sales method

• aging method

According to the fundamental principle of accounting, what should be matched?

• assets and liabilities

• credits and debits

• revenue and expenses incurred in generating that revenue

• cash and accounts receivable

When should uncollectable accounts expense be reported?

• when the account is determined to be uncollectible

• at the beginning of the fiscal year

• in the year that the sale takes place

• when payment is received

What is the purpose of requiring customers to complete a credit application?

• to collect personal information

• to prevent bad debt

• to increase sales

• to create customer loyalty

What is the book value of accounts receivable?

• the total amount owned by customers

• the amount reasonably expected to be collected

• the original sale amount

• the amount written off as bad debt

Which account is used to record estimated uncollectible amounts under the allowance method?

• Bad Debt Expense

• Accounts Receivable

• Allowance for Uncollectible Accounts

• Income Summary

When using the percentage of net sales method what does a business assume?

• all accounts will be collected

• no accounts will uncollectible

• a certain percentage of each year's net sales will be uncollectible

• past due accounts will be paid eventually

How is the adjusted trial balance amount for Allowance for Uncollectible Accounts calculated?

• trial balance minus adjustments

• trial balance plus adjustments

• adjustments only

• previous balance only

When does an account need adjusting?

• at the beginning of each month

• when a payment is received

• when its balance isn't up to date as of the last day of the accounting period

• when a sale occurs