1. Which method of reco accrual accounting? a. Allowance method b. Direct writeoff method c. Percent of sales method 2. When the allowance method is used, the entry to record the writeoff of a specific account would Decrease both accounts receivable and the allowance b. Decrease accounts receivable and increase allowance c. Increase both accounts receivable and the allowance d. Increase accounts receivable and decrease the allowance - Under the allowance method, the journal entry to recorc the writeoff of a specific uncollectible account a. Affects neither net income nor working capital b. Affects neither net income nor accounts receivable c. Decreases both net income and working capital d. Decreases both net income and accounts receivable

1. Which method of reco accrual accounting? a. Allowance method b. Direct writeoff method c. Percent of sales method 2. When the allowance method is used, the entry to record the writeoff of a specific account would Decrease both accounts receivable and the allowance b. Decrease accounts receivable and increase allowance c. Increase both accounts receivable and the allowance d. Increase accounts receivable and decrease the allowance - Under the allowance method, the journal entry to recorc the writeoff of a specific uncollectible account a. Affects neither net income nor working capital b. Affects neither net income nor accounts receivable c. Decreases both net income and working capital d. Decreases both net income and accounts receivable

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Bad Debts

At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.

Accounts Receivable

The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.

Question

. Which method of recording bad debt loss is consistent with
accrual accounting?
a. Allowance method
b. Direct writeoff method
c. Percent of sales method
d. Percent of accounts receivable method
- When the allowance method is used, the entry to record
the writeoff of a specific account would
Decrease both accounts receivable and the allowance
b. Decrease accounts receivable and increase allowance
Increase both accounts receivable and the allowance
d. Increase accounts receivable and decrease the allowance
3. Under the allowance method, the journal entry to record
the writeoff of a specific uncollectible account
a. Affects neither net income nor working capital
b. Affects neither net income nor accounts receivable
c. Decreases both net income and working capital
d. Decreases both net income and accounts receivable
4. Under the allowance method, the entries at the time of
collection of an account previously written off would
a. Decrease the allowance for doubtful accounts
b. Increase net income
Have no effect on the allowance for doubtful accounts
d. Have no effect on net income
5. Collection of accounts receivable previously written off
results in an increase in cash and an increase in
a. Accounts receivable
b. Allowance for doubtful accounts
c. Bad debt expense
d. Retained earnings

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