Question :
21) The percent-of-sales method:
A) computes uncollectible-account expense as a percent : 1230158
21) The percent-of-sales method:
A) computes uncollectible-account expense as a percent of accounts receivable.
B) takes a balance sheet approach.
C) employs the expense recognition (matching) concept.
D) will result in the same amount of estimated uncollectible accounts expense as the aging method.
22) The allowance method that brings the balance of the allowance account to the needed amount as determined by the aging schedule is:
A) the percent-of-sale method.
B) the aging-of-receivables method.
C) an income statement approach, since it focuses on the amount of expense to be reported on the income statement.
D) none of the above.
23) The entry to write off an account under the allowance method for estimating uncollectible accounts:
A) reduces total assets.
B) reduces net income.
C) has no effect on total assets or net income.
D) increases net income.
24) The aging-of-receivables method:
A) uses an income statement approach.
B) focuses on the amount of receivable that will not be collected.
C) can only be used by service companies.
D) will produce results similar to those under the direct write-off method.
25) Under the allowance method, when a company determines that they will not be able to collect from a particular customer, they will debit:
A) Uncollectible-Account Expense.
B) Accounts Receivable.
C) Allowance for Uncollectible Accounts.
D) Sales Revenue.
26) Under the allowance method, when an account receivable is written off, the journal entry:
A) violates the matching principle.
B) will decrease net income.
C) will decrease total current assets.
D) will have no effect on net accounts receivable.
27) Most companies will use:
A) the percent-of-sales method for interim statements and the aging-of-receivables method at the end of the year.
B) the aging-of-receivables method for interim statements and the percent-of-sales method at the end of the year.
C) the direct write-off method.
D) all of the above.
28) The direct write-off method:
A) reports receivables at their net realizable value.
B) does not use an allowance for uncollectible accounts.
C) is considered generally acceptable accounting for financial statement purposes.
D) estimates uncollectible accounts as a percentage of sales.
29) The direct-write off method:
A) may overstate accounts receivable on the balance sheet.
B) recognizes the expense in the same period as the sales revenue.
C) credits Allowance for Uncollectible Accounts when an account is written off.
D) credits Uncollectible-Account Expense when an account is written off.
30) Which of the following is a correct statement regarding the direct write-off method?
A) Most companies use the direct-write off method for their financial statements.
B) Companies are required to use the direct write-off method for federal income tax purposes.
C) A company records the uncollectible-account expense when it writes off an individual account receivable .
D) Both B and C.
