Question :
41. Both U.S. GAAP and IFRS require the allowance method for : 1230640
41. Both U.S. GAAP and IFRS require the allowance method for uncollectible accounts, which involves estimating the amount of uncollectible accounts receivable associated with
A. the cumulative total of all accounting period’s total sales.
B. the cumulative total of all accounting period’s credit sales.
C. each accounting period’s total sales.
D. each accounting period’s credit sales.
E. the cumulative total of all accounting period’s cash sales.
42. Bad Debt Expense is also called
A. the Provision for Bad Debts and the Provision for Uncollectible Accounts
B. the Provision for Bad Debts, only
C. the Provision for Uncollectible Accounts, only
D. the direct write-off method, only
E. the indirect write-off method, only
43. Bad Debt Expense is also called the Provision for Bad Debts and the Provision for Uncollectible Accounts. Provision in this context refers to
A. a liability in U.S. GAAP, not an expense; that provision in IFRS refers to an expense whose timing or amount, or both, are uncertain.
B. an expense in U.S. GAAP, not a liability; that provision in IFRS refers to an expense whose timing or amount, or both, are uncertain.
C. an liability in U.S. GAAP, not an expense; that provision in IFRS refers to a liability whose timing or amount, or both, are uncertain.
D. an expense in U.S. GAAP, not a liability; that provision in IFRS refers to a liability whose timing or amount, or both, are uncertain.
E. none of the above
44. Allowance for Uncollectibles contra account appears among the _____ on a firm’s balance sheet as a(n) _____.
A. liability; subtraction
B. liability; addition
C. assets; addition
D. assets; subtraction
E. shareholders’ equity; subtraction
45. When a firm decides that a particular customer account is uncollectible, it removes that account by debiting the _____ and crediting _____ This process is called writing off the account.
A. Accounts Receivable, Gross; Allowance for Uncollectibles
B. Accounts Receivable, Net; Allowance for Uncollectibles
C. Allowance for Uncollectibles; Accounts Receivable, Gross
D. Allowance for Uncollectibles; Accounts Receivable, Net
E. Bad Debt Expense, Accounts Receivable, Net
46. There are two approaches that management can use to estimate the amount of credit sales that would prove to be uncollectible, the are the _____. Over time, the two methods, correctly used, will give the same cumulative income and asset totals. U.S. GAAP and IFRS do not require firms to use one or the other, and some firms use both methods.
A. gross amount of sales procedure and the aging-of-accounts-receivable procedure.
B. percentage-ofsales procedure and the aging-of-accounts-receivable procedure.
C. percentage-ofcost of good sold procedure and the amount of accounts-receivable procedure.
D. percentage-ofcost of good sold procedure and the aging-of-notes-receivable procedure.
E. gross amount of sales procedure and the amount of accounts-receivable procedure.
47. The percentage-of-sales procedure arises from the idea that uncollectible amounts will vary with the volume of credit business. The firm estimates the appropriate percentage by studying its own experience or by inquiring into the experience of similar firms. Default rates generally fall within the range of _____of credit sales.
A. .01% to .02%
B. 1% to 2%
C. 10% to 20%
D. 21% to 30%
E. 31% to 40%
48. After the firm estimates the amount of uncollectible accounts associated with the credit sales of each period, it makes an adjusting entry to debit _____ and credit _____.
A. Bad Debt Expense; Accounts Receivable, Net
B. Bad Debt Expense; Accounts Receivable, Gross
C. Allowance for Uncollectibles; Bad Debt Expense
D. Bad Debt Expense; Allowance for Uncollectibles
E. Allowance for Uncollectibles; Accounts Receivable, Gross
49. Under the _____ procedure, the firm estimates and recognizes its bad debt expense; the offsetting credit increases the balance in the Allowance for Uncollectibles. Under the _____ procedure, the firm estimates the ending balance in the Allowance for Uncollectibles account and makes a credit entry to bring the balance to this amount; the offsetting debit is to Bad Debt Expense.
A. aging; percentage-of-sales
B. percentage-of-sales; aging
C. percentage-of-sales; direct charge-off
D. direct charge-off; percentage-of-sales
E. percentage-of-sales; indirect charge-off
50. At the start of 2009, Colonial Designs’ Allowance for Uncollectibles balance is €120,000. During 2009, Colonial Designs’ credit sales were €5,000,000; of this amount, it expected 2% will become uncollectible. During 2009, Colonial Designs wrote off €70,000 of accounts receivable. At the end of 2009, Colonial Designs estimates, based on an aging of accounts, that the ending balance in the Allowance for Uncollectibles should be €130,000.
A. Allowance for Uncollectibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000
Accounts Receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000
B. Bad Debt Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000
Accounts Receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000
C. Allowance for Uncollectibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000
Bad Debt Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000
D. Bad Debt Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000
Allowance for Uncollectibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000
E. Allowance for Uncollectibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000
Accounts Receivable, gross. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000
