The percentage-of-receivables basis of estimating uncollectible accounts receivable emphasizes income statement relationships. ignores the existing balance in Allowance for Doubtful Accounts. produces a better estimate of cash realizable value. results in a better matching of expenses with revenues.

The percentage-of-receivables basis of estimating uncollectible accounts receivable emphasizes income statement relationships. ignores the existing balance in Allowance for Doubtful Accounts. produces a better estimate of cash realizable value. results in a better matching of expenses with revenues.

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter16: Accounting For Accounts Receivable

Section: Chapter Questions

Problem 1MC: The dollar difference between Accounts Receivable and Allowance for Doubtful Accounts is called (a)...

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Similar questions

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 account type is used to record bad debt estimation and is a contra account to Accounts Receivable?
The net realizable value of Accounts Receivable represents the company's best estimate of what it expects to collect on it's accounts receivable. It equals the total Accounts Receivable less an allowance for doubtful accounts. True False
All of the following are problems associated with the valuation of accounts receivable except A) uncollectible accounts B) returns C) Cash discounts under the net method D) allowances granted
The direct write-off method is generally not permitted for financial reporting purposes because a. Compared to the allowance method, it would allow greater flexibility to managers in manipulating reported net income.b. This method is primarily used for tax purposes.c. It is too difficult to accurately estimate future bad debts.d. Accounts receivable are not stated for the amount of cash expected to be collected.
Estimation of uncollectible accounts receivable based on accounts receivable Group of answer choices Emphasizes measurement of bad debt expense Emphasizes measurement of the net realizable value of accounts receivable Emphasizes measurement of total assets Is only acceptable for tax purposes
Which of the following is most likely to be used in determining a proper amount to be included in the allowance for doubtful accounts? Cash Sales divided by Accounts receivable. Accounts receivable divided by Cost of goods sold. Aging of accounts receivable. Year 2 accounts receivable compared to year one accounts receivable.
Why are sales, sales returns and allowances, bad debts, cashdiscounts, accounts receivable, and allowance for uncollectible accounts all included inthe same cycle?
Choose the correct and explain. The following statements pertain to presentation and valuation of receivables. Which is not in accordance with generally accepted practice? a.Credit balances in customers’ account receivable should be offset against other receivables to arrive at the net amount. b.Receivable balances should be valued at face amount minus allowance for doubtful accounts and for any anticipated adjustments, which in the normal course of events will reduce the amount of receivable to estimated realizable value. c.Long-term notes receivables which nominally bear no interest or an interest, which is unreasonably low should be stated at present value. d.Receivables denominated in foreign currency should be translated to local currency using the exchange rate on reporting period.
Which of the following methods may not be appropiate for estimating bad debt expense? a. Percentage of net credit sales b. Percentage of outstanding accounts receivables c. Aging of accounts receivables d. Percentage of sales
Which of the following is an advantage of using the net price method for recording cash discounts on credit sales? a. It eases communication with customers at balances. b. It properly reflects current per revenue. c. It simplifies recording of sales returns and allowances. d. It requires less recording keeping than the gross method.
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.