Ch. 7 Quiz – Flashcards
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The maturity date of a note receivable:
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is the day the note is due to be paid.
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A promissory note received from a customer in exchange for an account receivable:
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is a note receivable for the recipient.
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The person who signs a note receivable and promises to pay the principal and interest is the:
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maker.
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The accounting principle that requires financial statements (including notes) to report all relevant information about the operations and financial condition of a company is called:
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full disclosure.
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According to GAAP, the amount of bad debt expense can be estimated by:
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bad debt expense can be estimated by the percent of accounts receivable method, or by the aging of accounts receivable method.
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A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and their length of time past due is the:
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aging of accounts receivable method.
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An accounting procedure that (1) estimates and reports bad debts expense from credit sales during the period of the sales and (2) reports accounts receivable at the amount of cash to:
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allowance method of accounting for bad debts.
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The matching principle requires:
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the use of the allowance method of accounting for bad debts.
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A promissory note:
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is a written promise to pay a specified amount of money at a certain date.
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If the credit balance of the Allowance for Doubtful Accounts account exceeds the amount of a bad debt being written off, the entry to record the write-off against the allowance account results in:
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no effect on the expenses of the current period.
