Question 1

How is the receivables turnover ratio measured? What does this ratio indicate? Is a higher or lower receivables turnover preferable?

Accepted Answer

The answer of How is the receivables turnover ratio measured?...

Question 2

Explain why the percentage-of-receivables method is referred to as the balance sheet method and the percentage-of-credit-sales method is referred to as the income statement method.Which method is typically used in practice? Why?

Accepted Answer

The answer of Explain why the percentage-of-receivables method is referred...

Question 3

A company reports the following amounts at the end of the year (before any year-end adjustment).
  Record the adjustment for uncollectible accounts (1)using the percentage-of-receivables method,assuming the company estimates 10% of receivables will not be collected,and (2)using the percentage-of-credit-sales method,assuming the company estimates 2% of credit sales will not be collected.

Accepted Answer

The answer of A company reports the following amounts at...

Question 4

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided.
-_____ The amount of the adjustment to the allowance for uncollectible accounts during the period.

Accepted Answer

Bad debt expense is the term related to the adjustment of the allowance for uncollectible accounts during the period.

Answer: J
 Allowance for uncollectible accounts is the term related to the amount of the adjustment to the allowance for uncollectible accounts during the period.

Answer: A
 Accounts receivable are the term related to the amount owed to a company by its clients or customers with a certain amount of credit.

Answer: B
 Allowance method is the term related to the accounting practice of estimating and recording bad debt expenses based on historical data and other relevant factors.

Answer: I
 Decrease assets and increase expenses is the term related to the direct write-off method of accounting for uncollectible accounts, where assets and expenses are adjusted only when a client defaults on a payment.

Question 5

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided.
-_____ The effect of writing off an account receivable as a bad debt under the allowance method.

Accepted Answer

Under the allowance method, writing off an account receivable as a bad debt has no effect on the net income or total assets because the bad debt expense was already estimated and recorded in a prior period.

Question 6

Discuss the differences between the allowance method and the direct write-off method for recording uncollectible accounts.Which of the two is acceptable under financial accounting rules?

Accepted Answer

The answer of Discuss the differences between the allowance method...

Question 7

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided.
-_____ The procedure using an adjustment for future uncollectible accounts.

Accepted Answer

The Allowance method is a procedure that involves adjusting for future uncollectible accounts by estimating bad debts and recording them in advance.

Question 8

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided.
-_____ Considers that the longer past due the account receivable is,the less likely it is to be collected.

Accepted Answer

The aging method is used to estimate uncollectible accounts by considering that the longer an account receivable is past due, the less likely it is to be collected.

Question 9

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided.
-_____ Contra asset that represents the estimated amount of future bad debts.

Accepted Answer

The phrase "Contra asset that represents the estimated amount of future bad debts" is best described by the term "Allowance for uncollectible accounts," which is represented by letter J.

Question 10

At the end of the year,a company reports a balance in its Allowance for Uncollectible Accounts of $1,400 (credit)before any year-end adjustment.The company estimates future uncollectible accounts to be 3% of credit sales for the year.Credit sales for the year total $280,000.Record the adjustment for the allowance for uncollectible accounts using the percentage-of-credit-sales method.

Accepted Answer

The answer of At the end of the year,a company...

Question 11

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided.
-_____ Actual bad debts.

Accepted Answer

The answer of Listed below are ten terms followed by...

Question 12

Explain how companies account for uncollectible accounts receivable (bad debts).

Accepted Answer

The answer of Explain how companies account for uncollectible accounts...

Question 13

Give three examples of contra revenue accounts and the transactions with which they are associated.

Accepted Answer

The answer of Give three examples of contra revenue accounts...

Question 14

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided.
-_____ The total amount owed to a company from credit sales to customers.

Accepted Answer

The total amount owed to a company from credit sales to customers is referred to as "Accounts receivable."

Question 15

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided.
-_____ Recognizes bad debts when accounts become uncollectible.

Accepted Answer

The Direct write-off method recognizes bad debts when accounts become uncollectible by directly writing off the specific accounts.

Question 16

At the end of the year,a company reports a balance in its Allowance for Uncollectible Accounts of $1,400 (debit)before any year-end adjustment.The company estimates future uncollectible accounts to be 3% of credit sales for the year.Credit sales for the year total $280,000.Record the adjustment for the allowance for uncollectible accounts using the percentage-of-credit-sales method?

Accepted Answer

The answer of At the end of the year,a company...

Question 17

Listed below are five terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the best term by placing the letter designating the term in the space provided.
-_____ When a customer returns a product.

Accepted Answer

Sales returns refer to when a customer returns a product. Credit sales refer to sales made on credit, sales allowances are reductions in the selling price to compensate for problems with the product, sales discounts are reductions in the selling price for prompt payment, and trade discounts are reductions in the selling price for bulk purchases.

Question 18

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided.
-_____ Accounts receivable less allowance for uncollectible accounts.

Accepted Answer

Net realizable value is the amount of accounts receivable expected to be collected, calculated as accounts receivable less allowance for uncollectible accounts.

Question 19

What does it mean to report accounts receivable at their net realizable value.

Accepted Answer

The answer of What does it mean to report accounts...

Question 20

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided.
-_____ The effect of estimating future bad debts.

Accepted Answer

Estimating future bad debts decreases assets (through an allowance for doubtful accounts) and increases expenses (bad debt expense).

Quiz 5: Receivables and Sales

How is the receivables turnover ratio measured? What does this ratio indicate? Is a higher or lower receivables turnover preferable?

Explain why the percentage-of-receivables method is referred to as the balance sheet method and the percentage-of-credit-sales method is referred to as the income statement method.Which method is typically used in practice? Why?

Discuss the differences between the allowance method and the direct write-off method for recording uncollectible accounts.Which of the two is acceptable under financial accounting rules?

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ The procedure using an adjustment for future uncollectible accounts.

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ Contra asset that represents the estimated amount of future bad debts.

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ Actual bad debts.

Explain how companies account for uncollectible accounts receivable (bad debts).

Give three examples of contra revenue accounts and the transactions with which they are associated.

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ The total amount owed to a company from credit sales to customers.

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ Recognizes bad debts when accounts become uncollectible.

Listed below are five terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the best term by placing the letter designating the term in the space provided. -_____ When a customer returns a product.

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ Accounts receivable less allowance for uncollectible accounts.

What does it mean to report accounts receivable at their net realizable value.

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ The effect of estimating future bad debts.