Question 1

Match each description to the appropriate term (a-i).
-All money claims against other entities
A)Accounts receivable turnover
B)Net realizable value
C)Accounts receivable
D)Aging report
E)Receivables
F)Direct write-off method
G)Allowance for doubtful accounts
H)Bad debt expense
I)Factoring

Accepted Answer

Receivables refers to all money claims against other entities, including both accounts receivable and notes receivable.

Answer: C
 Accounts receivable specifically refers to money owed by customers for goods or services already provided.

Answer: I
 Notes receivable refers to money owed by a debtor in the form of a written promissory note.

Answer: D
 Aging the receivables is a method of analyzing the aging of accounts receivable to estimate the likelihood of collection and potential bad debts.

Answer: B
 Net realizable value is the expected amount of cash that will be collected from accounts receivable after accounting for any uncollectible amounts (i.e. the allowance for doubtful accounts).

Answer: G
 The allowance for doubtful accounts is a contra asset account that reduces the amount of accounts receivable on the balance sheet to reflect the estimated amount of uncollectible accounts.

Answer: H
 Bad debt expense is the expense recognized on the income statement to account for the estimated amount of uncollectible accounts.

Answer: F
 The direct write-off method is a method of accounting for bad debts where the uncollectible account is simply written off when it is deemed uncollectible. This method does not provide for a specific estimate of bad debts or an allowance for doubtful accounts.

Answer: A
 Accounts receivable turnover ratio measures the number of times a company's accounts receivable is collected during a period, and is useful in analyzing the efficiency of a company's credit and collection policies.

Question 2

When an account receivable is written off under the direct write-off method, the accounting equation is kept in balance because

Accepted Answer

When an account receivable is written off under the direct write-off method, the assets (specifically, accounts receivable) decrease by the amount that is being written off, and the equity decreases by the same amount through an expense account (such as bad debt expense). Therefore, both assets and equity decrease by the same amount, which keeps the accounting equation in balance.

Question 3

Match each description to the appropriate term (a-i).
-Term for selling receivables
A)Accounts receivable turnover
B)Net realizable value
C)Accounts receivable
D)Aging report
E)Receivables
F)Direct write-off method
G)Allowance for doubtful accounts
H)Bad debt expense
I)Factoring

Accepted Answer

The answer of Match each description to the appropriate term...

Question 4

Match each description to the appropriate term (a-d). Each term may be used more than once.
-Offers two methods of estimating uncollectible accounts.
A)Direct write-off method
B)Aging of receivables method
C)Percent of sales method
D)Allowance method

Accepted Answer

The answer of Match each description to the appropriate term...

Question 5

Match each description to the appropriate term (a-i).
-Operating expense recorded as a result of receivables becoming uncollectible
A)Accounts receivable turnover
B)Net realizable value
C)Accounts receivable
D)Aging report
E)Receivables
F)Direct write-off method
G)Allowance for doubtful accounts
H)Bad debt expense
I)Factoring

Accepted Answer

Bad debt expense is the operating expense recorded when receivables become uncollectible.

Question 6

Match each description to the appropriate term (a-d). Each term may be used more than once.
-This method focuses on the income statement.
A)Direct write-off method
B)Aging of receivables method
C)Percent of sales method
D)Allowance method

Accepted Answer

The percent of sales method is a method of estimating bad debts that is based on a percentage of the total sales for the period. It focuses on the income statement by estimating the bad debt expense for the period and recording it as an expense on the income statement. The other methods listed (direct write-off, aging of receivables, and allowance) also involve estimating bad debts, but they may focus more on the balance sheet or a combination of the income statement and balance sheet.

Question 7

Match each description to the appropriate term (a-d). Each term may be used more than once.
-When using this method, estimated bad debts are added to the existing allowance balance.
A)Direct write-off method
B)Aging of receivables method
C)Percent of sales method
D)Allowance method

Accepted Answer

The answer of Match each description to the appropriate term...

Question 8

Match each description to the appropriate term (a-d). Each term may be used more than once.
-This method records bad debts when specific accounts are deemed uncollectible.
A)Direct write-off method
B)Aging of receivables method
C)Percent of sales method
D)Allowance method

Accepted Answer

The direct write-off method records bad debts at the moment an account is deemed uncollectible, directly adjusting the accounts receivable balance without estimating future bad debts.

Question 9

Match each description to the appropriate term (a-d). Each term may be used more than once.
-This method is based on the theory that older accounts are less likely to be collected.
A)Direct write-off method
B)Aging of receivables method
C)Percent of sales method
D)Allowance method

Accepted Answer

The description matches the aging of receivables method, which analyzes the age of each account and predicts the likelihood of it being collected based on how long it has been outstanding. The other methods (direct write-off, percent of sales, and allowance) do not take into account the age of the receivables as a primary factor in determining whether or not they will be collected.

Question 10

Match each description to the appropriate term (a-i).
-Records bad debt expense only when a specific customer's account is deemed worthless
A)Accounts receivable turnover
B)Net realizable value
C)Accounts receivable
D)Aging report
E)Receivables
F)Direct write-off method
G)Allowance for doubtful accounts
H)Bad debt expense
I)Factoring

Accepted Answer

The direct write-off method is the one that records bad debt expense only when a specific customer's account is deemed worthless.

Question 11

Match each description to the appropriate term (a-i).
-A list of customer accounts sorted by age classes
A)Accounts receivable turnover
B)Net realizable value
C)Accounts receivable
D)Aging report
E)Receivables
F)Direct write-off method
G)Allowance for doubtful accounts
H)Bad debt expense
I)Factoring

Accepted Answer

The answer of Match each description to the appropriate term...

Question 12

Match each description to the appropriate term (a-d). Each term may be used more than once.
-This method focuses on the balance sheet.
A)Direct write-off method
B)Aging of receivables method
C)Percent of sales method
D)Allowance method

Accepted Answer

The answer of Match each description to the appropriate term...

Question 13

Match each description to the appropriate term (a-i).
-The difference between accounts receivable and allowance for doubtful accounts
A)Accounts receivable turnover
B)Net realizable value
C)Accounts receivable
D)Aging report
E)Receivables
F)Direct write-off method
G)Allowance for doubtful accounts
H)Bad debt expense
I)Factoring

Accepted Answer

The net realizable value of accounts receivable is calculated by subtracting the allowance for doubtful accounts from the total accounts receivable. This represents the amount of receivables a company expects to actually collect.

Question 14

Match each description to the appropriate term (a-i).
-Measures how frequently during the year accounts receivable are being turned into cash
A)Accounts receivable turnover
B)Net realizable value
C)Accounts receivable
D)Aging report
E)Receivables
F)Direct write-off method
G)Allowance for doubtful accounts
H)Bad debt expense
I)Factoring

Accepted Answer

Accounts receivable turnover measures how frequently during the year accounts receivable are being turned into cash.

Answer: B 
 Net realizable value is the amount that accounts receivable are expected to turn into cash after an allowance for doubtful accounts has been taken into consideration.

Answer: C 
 Accounts receivable are amounts that are owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Answer: D 
 Aging the receivables is the process of classifying accounts receivable by the length of time they have been outstanding.

Answer: E 
 Receivables are amounts owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Answer: F 
 The direct write-off method is a method of accounting for bad debts in which the bad debt expense is recorded when an account is determined to be uncollectible.

Answer: G 
 The allowance for doubtful accounts is a contra account to accounts receivable that represents the portion of accounts receivable that is expected to be uncollectible.

Answer: H 
 Bad debt expense is the expense that is recognized when it is expected that a portion of accounts receivable will be uncollectible.

Answer: I 
 Notes receivable are written promises by customers to pay a fixed sum of money by a certain date in the future.

Question 15

At the end of the current year, Accounts Receivable has a balance of $550,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and sales for the year total $2,500,000. An analysis of receivables estimates uncollectible receivables as $25,000.​ Determine the net realizable value of accounts receivable after adjustment. (Hint: Determine the amount of the adjusting entry for bad debt expense and the adjusted balance of Allowance for Doubtful Accounts.)

Accepted Answer

The net realizable value of accounts receivable is calculated as the Accounts Receivable balance minus the adjusted Allowance for Doubtful Accounts. Initially, the Allowance for Doubtful Accounts has a credit balance of $5,500. The analysis estimates uncollectible receivables at $25,000, which means the Allowance for Doubtful Accounts needs to be adjusted to this amount. The adjusting entry increases the allowance by $19,500 ($25,000 - $5,500). Therefore, the net realizable value of accounts receivable is $550,000 (Accounts Receivable) - $25,000 (adjusted Allowance for Doubtful Accounts) = $525,000.

Question 16

Match each description to the appropriate term (a-d). Each term may be used more than once.
-This method is most often used by small companies with few receivables.
A)Direct write-off method
B)Aging of receivables method
C)Percent of sales method
D)Allowance method

Accepted Answer

Direct write-off method is a simple and straightforward method of accounting for bad debts. It is most often used by small companies with few receivables.

Question 17

Match each description to the appropriate term (a-d). Each term may be used more than once.
-With this method, there is no allowance account.
A)Direct write-off method
B)Aging of receivables method
C)Percent of sales method
D)Allowance method

Accepted Answer

The direct write-off method does not use an allowance account and instead directly writes off the uncollectible accounts as expenses when they become uncollectible.

Question 18

The direct write-off method

Accepted Answer

The direct write-off method is used by businesses whose receivables are a small part of their current assets. It allows for individual uncollectible accounts to be written off as an expense when they are deemed uncollectible. It is not limited based on the number of accounts receivable or payment method used. However, it does not allow for reinstatement if the amount owed is received after being written off.

Question 19

Match each description to the appropriate term (a-i).
-A contra asset that represents the amount of estimated uncollectible receivables
A)Accounts receivable turnover
B)Net realizable value
C)Accounts receivable
D)Aging report
E)Receivables
F)Direct write-off method
G)Allowance for doubtful accounts
H)Bad debt expense
I)Factoring

Accepted Answer

Allowance for doubtful accounts is a contra asset that represents the estimated amount of uncollectible receivables.

Answer: B
 Net realizable value is the value of the receivables after deducting the allowance for doubtful accounts.

Answer: C
 Accounts receivable are amounts owed by customers for goods or services already provided.

Answer: D
 Aging the receivables is the process of analyzing the age of account receivables to estimate the likelihood of collection.

Answer: E
 Receivables are assets representing amounts due to a company, which can include accounts receivable, notes receivable, and other forms of debt.

Answer: F
 The direct write-off method is a method of accounting for bad debts that directly charges the uncollectible amount to expense at the time it is determined to be uncollectible.

Answer: H
 Bad debt expense is the expense recognized when customers do not pay their accounts receivable.

Answer: I
 Notes receivable are written promises to pay a certain amount on a future date.

Answer: A
 Accounts receivable turnover is a measure of how many times a company collects its average accounts receivable balance during a period.

Question 20

Match each description to the appropriate term (a-i).
-A receivable created from selling merchandise or services on account
A)Accounts receivable turnover
B)Net realizable value
C)Accounts receivable
D)Aging report
E)Receivables
F)Direct write-off method
G)Allowance for doubtful accounts
H)Bad debt expense
I)Factoring

Accepted Answer

Accounts receivable are receivables created from selling merchandise or services on account.

Answer: B
 Net realizable value is the amount of accounts receivable that is expected to be collected and is calculated by subtracting the allowance for doubtful accounts from the total accounts receivable.

Answer: E
 Receivables refer to any amounts owed to a business, including accounts receivable and notes receivable.

Answer: D
 Aging the receivables involves separating the accounts receivable into different categories based on how long they have been outstanding, which helps the business track and manage collections.

Answer: I
 Notes receivable are written promises from customers to pay the business a certain amount at a specified time in the future.

Answer: A
 Accounts receivable turnover is a ratio that measures how quickly a business is able to collect on its accounts receivable.

Answer: F
 The direct write-off method is a method of accounting for bad debts that involves waiting until a specific account is deemed uncollectible before writing it off as a loss.

Answer: G
 The allowance for doubtful accounts is a contra asset account that is used to reduce the reported amount of accounts receivable to its estimated net realizable value.

Answer: H
 Bad debt expense is the expense incurred by a business when a customer is unable to pay its accounts receivable and they are written off as uncollectible.

Quiz 8: Receivables

Match each description to the appropriate term (a-i). -All money claims against other entities A)Accounts receivable turnover B)Net realizable value C)Accounts receivable D)Aging report E)Receivables F)Direct write-off method G)Allowance for doubtful accounts H)Bad debt expense I)Factoring

When an account receivable is written off under the direct write-off method, the accounting equation is kept in balance because

Match each description to the appropriate term (a-i). -Term for selling receivables A)Accounts receivable turnover B)Net realizable value C)Accounts receivable D)Aging report E)Receivables F)Direct write-off method G)Allowance for doubtful accounts H)Bad debt expense I)Factoring

Match each description to the appropriate term (a-d). Each term may be used more than once. -Offers two methods of estimating uncollectible accounts. A)Direct write-off method B)Aging of receivables method C)Percent of sales method D)Allowance method

Match each description to the appropriate term (a-d). Each term may be used more than once. -This method focuses on the income statement. A)Direct write-off method B)Aging of receivables method C)Percent of sales method D)Allowance method

Match each description to the appropriate term (a-d). Each term may be used more than once. -When using this method, estimated bad debts are added to the existing allowance balance. A)Direct write-off method B)Aging of receivables method C)Percent of sales method D)Allowance method

Match each description to the appropriate term (a-d). Each term may be used more than once. -This method records bad debts when specific accounts are deemed uncollectible. A)Direct write-off method B)Aging of receivables method C)Percent of sales method D)Allowance method

Match each description to the appropriate term (a-d). Each term may be used more than once. -This method is based on the theory that older accounts are less likely to be collected. A)Direct write-off method B)Aging of receivables method C)Percent of sales method D)Allowance method

Match each description to the appropriate term (a-d). Each term may be used more than once. -This method focuses on the balance sheet. A)Direct write-off method B)Aging of receivables method C)Percent of sales method D)Allowance method

Match each description to the appropriate term (a-d). Each term may be used more than once. -This method is most often used by small companies with few receivables. A)Direct write-off method B)Aging of receivables method C)Percent of sales method D)Allowance method

Match each description to the appropriate term (a-d). Each term may be used more than once. -With this method, there is no allowance account. A)Direct write-off method B)Aging of receivables method C)Percent of sales method D)Allowance method

The direct write-off method