Why smaller companies choose direct method to write off uncollectible accounts? a. Uncollectible amount will be material b. Uncollectible amount will be immaterial c. There will not be any uncollectible accounts d. None of the options

Why smaller companies choose direct method to write off uncollectible accounts? a. Uncollectible amount will be material b. Uncollectible amount will be immaterial c. There will not be any uncollectible accounts d. None of the options

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 11MC: Which of the following best represents a positive product of a lower number of days sales in...

See similar textbooks

Related questions

Q: ating efficiency in retail banks is low due to Revenues are low O a Fixed expenses are high bo…

A: Retail banking provide the services to the small customers and provides the retail banking services…

Q: If a company desires to increase cash flow from operations, which of the following changes would not…

A: Cash flow from operations captures the amount of cash which is generated by an entity's normal…

Q: A change in credit policy has caused an increase in sales, an increase in discounts taken, a…

A: A CREDIT POLICY DECIDE WHO IS ELIGIBLE FOR CREDIT FROM YOUR COMPANY AND DETERMINES HOW YOU WILL…

Q: What is the minimum probability of collection that should be accepted by firms that have a 25%…

A: Profit margin means amount of net income earned on the sales revenue. 25% profit margin means out of…

Q: 20 The suitable priority of preparing financial statements: a. Balance sheet, then income statement…

A: Question 20: The correct answer is option is B i.e. Income Statement->changes in equity statement…

Q: Which of the following is not among the consequences of a loose credit policy ? a) Sales…

A: Introduction: A loose credit policy refers to a credit policy intending to increase the money supply…

Q: What does a firm need to do to improve liquidity? O A. Stock up on inventory in order to never run…

A: Liquidity situation of the business means ability of the business to pay short term obligations from…

Q: Why would a company chose to factor its receivables,given that it will get less money than the…

A: Meaning of Factoring Factoring means nothing but discounting the bills receivables before the due…

Q: Which of the following method is used by the companies to finance their receivables from slow paying…

A: There are various short term sources of finance

Q: increasing collection period for trade receivable suggest about a firm’s credit policy

A: The average collection period is the average number of days required to collect invoiced amounts…

Q: Operating efficiency in retail banks is low due to a. Revenues are low. b. Assets are low. C.…

A: Retail banking: Individual customers rather than corporations are served by retail banking,…

Q: . Mohammed has made an analysis of the two food producing companies in Oman. The analysis is on…

A: EXPLAINATIO:- Working capital management that is adequately conceived and managed is intended to…

Q: Which asset liability combination would result in the firm having the highest risk of insolvency? A.…

A: SOLUTION INSOLVENCY MEANS WHEN AN INDIVIDUAL OR COMPANY CAN NO LONGER MEET THEIR FINANCIAL…

Q: A small business in which credit sales fluctuate greatly from year to year uses the direct write-off…

Q: If the % of uncollectible accounts receivable does not change, there can still be an increase in the…

A: Yes it is true that if % of uncollectible accounts receivable does not change then still there is…

Q: What should a company do to improve its accounts receivable turnover rate? increase its sales force…

A: 2/10,n/30 means that a client is given a option to either receive 2% discount for payment to vendor…

Q: When a company routinely sells on credit, it is inevitable that some of its customers will not pay…

A: The customer who are not able to pay the amount owed is known as bad debt. Bad debt is expense for…

Q: If company A has current ratio of 1.3 while company B has a current ratio of 2.3, which is a better…

A: Current ratio is a ratio which measures the proportion of current assets over current liabilities.…

Q: 49- which of the following source of finance relates to suppliers ? a. Commercial Paper b. Credit…

A: There are various sources of finance

Q: Who is responsible for the liabilities of a company and the risk of its value dropping to zero? a.…

A: There are various stakeholders who are part of the functioning of the company. It includes…

Q: Which is correct with regards to the effects of restricting credit standards? a. Investment in…

A: Restricting credit standard means company strict the credit policy. When company is more concerned…

Q: If we hold all other factors the same, an increase in interest rates will: a.

A: Option (a). Decrease the present value of a stream of constant payments we expect to receive.

Q: Gillian Company has a current ratio greater than 1 and an acid-test ratio less than 1. How would…

A: Formula: Current Ratio= Total Current AssetsTotal Current Liability Acid Ratio/Quick Ratio= Total…

Q: Item 33 of 50 The principal advantage of using commercial paper as a short-term financing instrument…

A: Short-Term finance refers to arranging funds for business purpose for fulfilling requirement that…

Q: Question If the % of uncollectible accounts does not change, there cannot be a savings for this…

A: Bad Debt and Allowance for Bad debt: When a customer is unable to pay the amount due, the amount…

Q: QuickBank has decided to lower the interest rate it charges on business loans in order to attract…

A: Adverse Selection: It is a problem Created when there is asymmetric information before a transaction…

Q: Which of the following statements is most correct? JUST EXPLAIN ONE ANSWER WHICH IS INCORRECT. In…

A: Statement 1 is most correct

Question

30. Why smaller companies choose direct method to write off uncollectible accounts? a. Uncollectible amount will be material b. Uncollectible amount will be immaterial c. There will not be any uncollectible accounts d. None of the options

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

31 - Which of the following is not among the consequences of a loose credit policy ? a) Sales increase B) Collection expenses increase NS) Funds tied to receivables increase. D) The amount of doubtful receivables decreases. TO) Transaction costs increase as they analyze new customers.
5. Which of the following will make Murabaha invalid? a. If payment is made in installments b. if the supplier is not paid directly by the bank. c. Price not agreed. d. Price not fully paid.
10.-If the % of uncollectible accounts receivable does not change, there can still be an increase in the loss for this concept simply because of an increase in sales. True or false?
28. Which of the following method is used by the companies to finance their receivables from slow paying customers? a. None of the options b. Bank overdraft c. Cash credit d. Factoring
Question If the % of uncollectible accounts does not change, there cannot be a savings for this concept simply because of a decrease in sales. true or false?
7. What does an increasing collection period for trade receivable suggest about a firm’s credit policy? A. The business is making profits. B. The credit policy is too restrictive. C. The credit policy may be too lenient. D. The business is probably losing qualified customers. E. The collection period has no relationship to a business’s credit policy.
Coffee Partners decides to close due to the increased competition from the national chains. If after liquidating the noncash assets there is not enough cash to cover accounts payable, what happens?
If the cost of debt went up to 11 percent and all other factors remained equal, what would be the indifference point for EBIT? Break-even level $___?If the cost of debt went up to 11 percent and all other factors remained equal, what would be the indifference point for EBIT? Break-even level $___? Note:- • Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. • Answer completely. • You will get up vote for sure.
Suppose a company’s current credit terms are 1/10,net 30, but management is considering changingits terms to 2/10, net 40, relaxing its credit standards, and putting less pressure on slow-payingcustomers. How would you expect these changesto affect (a) sales, (b) the percentage of customerswho take discounts, (c) the percentage of customers who pay late, and (d) the percentage of customers who end up as bad debts?
29 - Which of the following is not a working rule of passive accounts ? a) If they give passive accounts, they either give a remainder or they do not give a remainder. B) Increases in the resources of the enterprise are recorded on the debit side of the passive accounts. NS) Decreases in the resources of the enterprise are recorded on the debit side of the passive accounts. D) Passive accounts are the accounts in which the changes in the resources of the enterprise are monitored. TO) Increases in the resources of the enterprise are recorded on the credit side of the passive accounts.
As a result of the COVID-19 crisis, company A has decided to sell its receivables to a bank in exchange for cash. What would be the effect of this financial decision on the company's current ratio, quick ratio and cash ratio?
Its difficult for payments bank to survive in long run ?