Match the terms with the definitions.
-A loss from failure to collect an account receivable.
A)aging the receivables
B)allowance method
C)bad debt expense
D)direct write-off method
E)matching principle
F)net receivables
G)percentage of receivables method
H)percentage of sales method

Question

Quizplus · Accepted Answer

A loss from failure to collect an account receivable is referred to as bad debt expense.

Answer: A
 Aging the receivables is a method of analyzing accounts receivable according to the number of days outstanding in order to estimate the likelihood of collection.

Answer: F
 Net receivables represent the amount of accounts receivable that is expected to be collected, less any estimated amounts for bad debt.

Answer: G
 The percentage of receivables method is a way of estimating bad debt expense by taking a percentage of the ending balance in accounts receivable.

Answer: H
 The percentage of sales method is a way of estimating bad debt expense by taking a percentage of the total credit sales made during the period.

Answer: B
 The allowance method is a method of accounting for bad debt expense that involves estimating the amount of accounts receivable that are unlikely to be collected and creating an allowance account to reduce the balance of accounts receivable.

Answer: D
 The direct write-off method is a method of accounting for bad debt expense that involves writing off the uncollectible balance of an account receivable when it is determined to be uncollectible.

Answer: E
 The matching principle requires that expenses be recognized in the same period as the revenue they helped to generate. In the case of bad debt expense, this means recognizing the expense in the period in which the related credit sales were made.

Match the Terms with the Definitions