Question : Multiple Choice Questions 23.Which of the following statements not correct? A. The use : 1168986

 

Multiple Choice Questions 

23.Which of the following statements is not correct?   

A. The use of the direct charge-off method of recording losses from uncollectible accounts usually results in the balance in the Accounts Receivable account being overstated.

 

B. The direct charge-off method of recording losses from uncollectible accounts is the method required by Federal income tax laws.

 

C. The direct charge-off method of recording losses from uncollectible accounts is an application of the matching principle.

 

D. When using the direct charge-off method, there is no Allowance for Doubtful Accounts account.

 

 

 

 

24.What is the type of account and normal balance of Allowance for Doubtful Accounts?   

A. Contra asset, credit

 

B. Asset, debit

 

C. Liability, credit

 

D. Contra asset, debit

 

 

 

 

25.Allowance for Doubtful Accounts is classified as   

A. a Contra Asset on the Balance Sheet.

 

B. a Liability on the Balance Sheet.

 

C. an Expense on the Income Statement.

 

D. A Contra Expense on the Income Statement.

 

 

 

 

26.Which of the following statements is not correct?   

A. The allowance method involves anticipating losses from uncollectible accounts by recognizing an expense for these losses before the actual accounts are written off.

 

B. The adjusting entry to record the estimated loss from uncollectible accounts includes a credit to Accounts Receivable.

 

C. Losses from uncollectible accounts can be estimated by analyzing sales or accounts receivable.

 

D. The balance of Uncollectible Accounts Expense appears among the operating expenses on the income statement.

 

 

 

 

27.The adjusting entry to record estimated losses from uncollectible accounts consists of a debit to   

A. Uncollectible Accounts Expense and a credit to Accounts Receivable.

 

B. Uncollectible Accounts Expense and a credit to Allowance for Doubtful Accounts.

 

C. Allowance for Doubtful Accounts and a credit to Accounts Receivable.

 

D. Accounts Receivable and a credit to Allowance for Doubtful Accounts.

 

 

 

 

28.The balance of the Allowance for Doubtful Accounts account is reported as   

A. a liability on the balance sheet.

 

B. a deduction from Sales on the income statement.

 

C. a deduction from Accounts Receivable on the balance sheet.

 

D. an expense on the income statement.

 

 

 

 

29.The method of accounting for losses from uncollectible accounts that produces a proper valuation of the accounts receivable on the balance sheet is   

A. the allowance method based on aging the accounts receivable.

 

B. the allowance method based on a percentage of net credit sales.

 

C. the direct charge-off method.

 

D. either the allowance method or the direct charge-off method.

 

 

 

 

30.An existing balance in Allowance for Doubtful Accounts is not considered when the estimate of loss is based on   

A. a percent of net credit sales.

 

B. an aging of accounts receivable.

 

C. a percent of total accounts receivable outstanding.

 

D. a percent of net income.

 

 

 

 

31.A firm reported sales of $300,000 during the year and has a balance of $20,000 in its Accounts Receivable account at year-end. Prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $300. The firm estimated its losses from uncollectible accounts to be one-half of 1 percent of sales. The entry to record the estimated losses from uncollectible accounts will include a credit to Allowance for Doubtful Accounts for   

A. $1,200.

 

B. $1,500.

 

C. $1,800.

 

D. $3,000.

 

 

 

32.A firm reported sales of $600,000 during the year and has a balance of $40,000 in its Accounts Receivable account at year-end. Prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $600. The firm estimated its losses from uncollectible accounts to be one-half of 1 percent of sales. The entry to record the estimated losses from uncollectible accounts will include a credit to Allowance for Doubtful Accounts for   

A. $6,000.

 

B. $3,600.

 

C. $3,000.

 

D. $2,400.