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Match Each Description to the Appropriate Term

Question 185

Matching

Match each description to the appropriate term. Each term may be used more than once.

Premises:

Responses:

This method records bad debts when specific accounts are deemed uncollectible.

Direct write-off method

When using this method, estimated bad debts are added to the existing allowance balance.

Aging of receivables method

This method is most often used by small companies with few receivables.

Percent of sales method

This method is based on the theory that older accounts are less likely to be collected.

Allowance method

This method focuses on the balance sheet.

Offers two methods of estimating uncollectible accounts.

With this method, there is no allowance account.

This method focuses on the income statement.

Premises:

This method records bad debts when specific accounts are deemed uncollectible.

When using this method, estimated bad debts are added to the existing allowance balance.

This method is most often used by small companies with few receivables.

This method is based on the theory that older accounts are less likely to be collected.

This method focuses on the balance sheet.

Offers two methods of estimating uncollectible accounts.

With this method, there is no allowance account.

This method focuses on the income statement.

Responses:

Direct write-off method

Aging of receivables method

Percent of sales method

Allowance method

Correct Answer:

Premises:

Responses:

This method records bad debts when specific accounts are deemed uncollectible.

When using this method, estimated bad debts are added to the existing allowance balance.

This method is most often used by small companies with few receivables.

This method is based on the theory that older accounts are less likely to be collected.

This method focuses on the balance sheet.

Offers two methods of estimating uncollectible accounts.

With this method, there is no allowance account.

This method focuses on the income statement.

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