question

Uncollectible Accounts

answer

Accounts receivable that cannot be collected

question

Allowance Method

answer

Crediting the estimated value of uncollectible accounts to a contra account

question

Book Value

answer

The difference between an asset's account balance and its related contra account balance

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Book Value of Accounts Receivable

answer

The difference between the value of Accounts Receivable and its contra account, Allowance for Uncollectible Accounts

question

Net Realizable Value

answer

The amount of accounts receivable a business expects to collect

question

Percent of Sales Method

answer

A method used to estimate uncollectible accounts receivable that assumes a percent of credit sales will become uncollectible

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Percent of Accounts Receivable Method

answer

A method used to estimate uncollectible accounts receivable that uses an analysis of accounts receivable to estimate the amount that will be uncollectible

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Aging of Accounts Receivable

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Analyzing accounts receivable according to when they are due

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Writing Off an Account

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Canceling the balance of a customer account because the customer does not pay

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Direct Write-off Method

answer

Recording uncollectible accounts expense only when an amount is actually known to be uncollectible

question

Promissory Note

answer

A written and signed promise to pay a sun of money at a specific time

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Note Payable

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A promissory note signed by a business and given to a creditor

question

Note Receivable

answer

A promissory note that a business accepts from a customer off business

question

Maker of a Note

answer

The person or business that signs a note, and thus promises to make a payment

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Payee

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The person or business to whom he amount do a nite is payable

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Principal

answer

The original amount of a note, sometimes referred to as the face amount

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Interest Rate

answer

The percentage of the principle that is due for the use of funds secured by a note

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Maturity Date

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The date on which the principal of a note is due to be repaid

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Time of a Note

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The length of time from the signing date of a note to the maturity date

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Maturity Value

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The amount that is due in the maturity date of a note

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Interest Income

answer

The interest earned on money owned

question

Dishonored Note

answer

A note that is not paided when due

question

The expense of an uncollectible account will not be recorded in the accounting period that the account becomes uncollectible.

answer

True

question

The account, Allowance for Uncollectible Accounts, has a normal credit balance.

answer

True

question

A business usually knows at the end of a fiscal year which customer accounts will become uncollectible.

answer

False; does not know

question

The account, Allowance for Uncollectible Accounts, is reported on the income statement.

answer

False; Balance Sheet

question

The book value of accounts receivable must be reasonable and unbiased estimate of the money the business expects to collect in the future.

answer

True

question

The percent of sales method of estimating uncollectible accounts expense assumes that a portion of every dollar of sales on account will become uncollectible.

answer

True

question

The accounting concept, Neutrality, is applied when the process of making accounting estimates is free from bias.

answer

True

question

The percent of each age group of an accounts receivable aging that is expected to become uncollectible is determined by the Securities and Exchange Commission.

answer

False; business uncollectable method Allowable/Direct

question

The adjusting entry for uncollectable accounts does not affect the balance of the Accounts Receivable account.

answer

True

question

A business having a $300.00 credit balance in Allowance for Uncollectible accounts to be $4,000.00 would record a $4,300.00 credit to Allowance for Uncollectible Accounts.

answer

False; $3,700 is subtracted not added

question

When an account is written off as uncollectible, the business sends the customer a memo.

answer

True

question

When a customer account is written off under the allowance method, book value of accounts receivable increases.

answer

True

question

The direct write-off method of accounting for uncollectible accounts does not comply with GAAP.

answer

True

question

When a previously written-off account is collected, Accounts Receivable is both debited and created for the amount collected.

answer

True

question

A note provide the business with legal evidence of the debit should it be necessary to go to court to collect.

answer

True

question

Total assets are reduced when a business accepts a note receivable from a customer needing an extension of time to pay an account receivable.

answer

False; Nothing is increased or decreased a wash occurs

question

Interest rates are stated as a percentage of the principal.

answer

True

question

Interest income is classified as an Other Revenue account.

answer

True

question

The method for calculating interest for the same for notes payable and notes receivable.

answer

True

question

Interest income should be recorded on a dishonored note receivable.

answer

True

question

Recorded Adjusting entry for uncollectible accounts expense.

answer

Journal: General Debit: Uncollectible Accounts Expense Credit: Allowance for Uncollectible Accounts

question

Wrote off Sanderson Company's past-due account as uncollectible.

answer

Journal: General Debit: Allowance for Uncollectible Accounts Credit: Accounts Receivable/Sanderson Company

question

Received cash in full payment of Sanderson Company's account, previously written off as uncollectible. First Entry

answer

Journal: General Debit: Accounts Receivable/Sanderson Company Credit: Allowance for Uncollectible Accounts

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Received cash in full payment of Sanderson Company's account, previously written off as uncollectible. Second Entry.

answer

Journal: Cash Receipts Debit: Cash Credit: Accounts Receivable/Sanderson Company

question

Accepted a note from Sanderson Company for an extension of time on its account.

answer

Journal: General Debit: Notes Receivable Credit: Accounts Receivable/Sanderson Company

question

Collected a note receivable from Sanderson Company.

answer

Journal: Cash Receipts Debit: Cash Credit: Notes Receivable/Interest Income

question

Williams Supply dishonored a notes receivable.

answer

Journal: General Debit: Accounts Receivable/Williams Supply Credit: Notes Receivable/Interest Income

Accounting I Study Guide Chapter 14 – Flashcards

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