Question :
91. In estimating the amount of uncollectible accounts the accountant (1) : 1230620
91. In estimating the amount of uncollectible accounts the accountant (1) estimates the amount of uncollectible accounts that will likely occur over time in connection with sales of each period and (2) makes an entry debiting Bad Debt expense and crediting Allowance for Uncollectible Accounts. The name of this procedure is/are the
A. percentage-of-sales
B. aging-of-accounts-receivable
C. direct write-off
D. indirect write-off
E. tax accounting
92. Which of the following is/are true?
A. The percentage-of-sales procedure (1) estimates the amount of uncollectible accounts that will likely occur over time in connection with sales of each period and (2) makes an entry debiting Bad Debt expense and crediting Allowance for Uncollectible Accounts.
B. The aging-of-accounts-receivable procedure (1) estimates the amount of outstanding accounts receivable that the firm does not expect to collect and (2) adjusts the balance in the Allowance for Uncollectible Accounts so that, after the entry to recognize estimated uncollectibles, the balance in the account will equal the amount that the firm does not expect to collect
C. The percentage-of-sales and the aging-of-accounts-receivable procedures should produce a balance in the Allowance for Uncollectible Accounts that is approximately the same at the end of each period.
D. all of the above.
E. none of the above.
93. In estimating the amount of uncollectible accounts the accountant (1) estimates the amount of uncollectible accounts that will likely occur over time in connection with sales of each period and (2) makes an entry debiting Bad Debt expense and crediting Allowance for Uncollectible Accounts. The name of this procedure is/are the
A. percentage-of-sales
B. aging-of-accounts-receivable
C. direct write-off
D. indirect write-off
E. tax accounting
94. A debit balance in the allowance account may exist before recognizing estimated uncollectibles for the period because
A. firms sometimes write off specific customers’ accounts during an accounting period as the firm identifies the specific customers whose accounts have become uncollectible.
B. firms generally wait until the end of the accounting period to recognize bad debt expense for the period
C. the account will always have a credit balance after recognizing the provision for estimated uncollectibles for the period
D. all of the above.
E. none of the above.
95. Sellers of merchandise offer sales discount or cash discounts in order to
A. provide an interest allowance on funds paid before the payment is due
B. induce prompt payment so that it can reduce bookkeeping costs
C. induce prompt payment so that it can reduce collection costs
D. all of the above.
E. none of the above.
96. U.S. GAAP does not allow sellers of merchandise to recognize revenue from sales when the customers have the right to return goods.
A. unless the firm can reasonably estimate the amount of returns
B. unless the firm uses an allowance method to do so
C. unless the firm can reasonably estimate the amount of returns and uses an allowance method to do so
D. none of the above
E. all of the above
97. Firms that reduce the price charged to a customer after the firm has delivered the goods and the customer has found them to be unsatisfactory or damaged issue a
A. sales return
B. sales allowance
C. sales discount
D. sales factor
E. sales price reduction
98. Firms that are temporarily short of cash and unable to borrow from usual sources can convert accounts receivable into cash by
A. assigning accounts receivable and forwarding amounts collected to the lending institution
B. pledging its accounts receivable to the lending agency as collateral for a loan
C. factoring the accounts receivable to a bank or financing company to obtain cash
D. all of the above
E. none of the above
99. Firms that are temporarily short of cash and unable to borrow from usual sources can convert accounts receivable into cash by selling accounts receivable to a bank or financing company. This is called
A. assigning accounts receivable
B. pledging accounts receivable
C. factoring accounts receivable
D. transferring accounts receivable
E. none of the above
100. Firms that are temporarily short of cash and unable to borrow from usual sources can convert accounts receivable into cash by
A. assigning accounts receivable and forwarding amounts collected to the lending institution
B. pledging its accounts receivable to the lending agency as collateral for a loan
C. factoring the accounts receivable to a bank or financing company to obtain cash
D. all of the above
E. none of the above
