The allowance for doubtful accounts, which appears as a deduction from accounts receivable on a statement of financial position and which is based on an estimate of bad debts, is an application of which of the following? a. Expense recognition principle. b. Consistency characteristic. O c. Materiality quality. d. Revenue recognition principle.

The allowance for doubtful accounts, which appears as a deduction from accounts receivable on a statement of financial position and which is based on an estimate of bad debts, is an application of which of the following? a. Expense recognition principle. b. Consistency characteristic. O c. Materiality quality. d. Revenue recognition principle.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 9MC: Which method delays recognition of bad debt until the specific customer accounts receivable is...

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Which account type is used to record bad debt estimation and is a contra account to Accounts Receivable?
When an account is written off under the allowance method, there should be a debit to Bad Debt Expense.
The dollar difference between Accounts Receivable and Allowance for Doubtful Accounts is called (a) book value. (b) interest value. (c) carrying value. (d) net realizable value.
Which of the following best describes the proper presentation of accounts receivable in the financial statements?a. Accounts Receivable plus the Allowance for DoubtfulAccounts in the asset section of the balance sheet.b. Accounts Receivable in the asset section of the balancesheet and the Allowance for Doubtful Accounts in theexpense section of the income statement.c. Accounts Receivable less Bad Debt Expense in theasset section of the balance sheet.d. Accounts Receivable less the Allowance for DoubtfulAccounts in the asset section of the balance sheet.
Which among the statements is not correct? a. Net realizable value of accounts receivable results when accounts receivable is reduced by allowance for doubtful accounts b. Credit balances in accounts receivable arising from customer's advances should be excluded from accounts receivable c. The allowance method of recording bad debt loss is the one consistent with accrual accounting. d. answer not given
A disadvantage of basing bad debt expense on the historical relationship between actual bad debts and the outstanding accounts receivable balance at the end of the year is that A it is not a generally accepted accounting procedure. B it is an income statement approach. C it may not recognize the cause and effect relationship between expenses and revenues. D it may not result in a reasonable estimate of the net realizable value of receivables.
Distinguish the difference between Bad Debts and Provision for Doubtful Debts, indicating the accounting treatment given to an increase/decrease in the Provision for Doubtful Debts and the impacts generally on Income Statements and Statements of Financial Statements.
Which of the following is true? a. When individual customers’ accounts have credit balances of material amounts, these amounts must be deducted from the debit balance in other customers’ accounts on the statement of financial position. b. Sales revenue is increased by a recovery of an account previously written off. c. It is appropriate to measure the impairment of receivables based on recognized sales and other revenues. d. A noninterest-bearing promissory note is measured on the statement of financial position at face value less the amount of unamortized discount.
Which of the following is an accurate description of the allowance for doubtful accounts? liability account expense account contra account revenue account
If the provision for doubtful debt is increased, the accounting adjustment will be: Select one: a. Debit: Bad debt expense Credit: Trade receivables b. Debit: Bad debt expense Credit: Provision for bad debts c. Debit: Provision for bad debts Credit: Bad debt expense d. Debit: Trade receivables Credit: Bad debt expense
When using the allowance method for accounting for bad debts, accounts receivable is reported on the balance sheet at the expected net realizable value. When a particular receivable from a customer ultimately is determined to be uncollectible and is written off, the recording of this event will Group of answer choices A)decrease the net realizable value of the accounts receivable. B)have an effect that is not determinable from the information given. C)increase the net realizable value of the accounts receivable. D)decrease total current assets. e)None of the above
When the allowance method of recognizing bad debt expense is used, the allowance for doubtful accounts decrease when Specific account receivable is collected Account previously written off is collected Account previously written off becomes uncollectible Specific uncollectible account is written off