Question :
101. In estimating the amount of uncollectible accounts the accountant (1) : 1245987
101. 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.
102. 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.
103. 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.
104. 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.
105. 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.
106. As long as the amount collected from credit sales to a given group of customers exceeds the cost of goods sold and the other costs of serving that group of customers, including the costs of _____ accounts, the retailer will be better off selling to that group rather than losing the sales.
A. delinquent
B. uncollectible
C. collectible
D. preferred
E. common
107. An accounting issue for accounts receivable is the timing of recognition of the reduction in income caused by the uncollectibility of some accounts. With regard to timing, both U.S. GAAP and IFRS require that a seller recognize an expense for estimated uncollectible accounts receivable in the _____.
A. period when it recognizes the accounts receivable is uncollectable
B. period after it recognizes the related revenue
C. same period when it recognizes the related revenue
D. period before it recognizes the related revenue
E. period after it recognizes the accounts receivable is uncollectable
108. 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.
109. 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.
110. 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.
