20. If the debit side of the trial balance is undervalued by P2,000 with the correct debit balance, which of the following are not the possible reasons? 1. The cash payment for the electricity bill of P2,000 is recorded as the payment for rates in the ledgers. 2. The transaction regarding the settlement of debt by Mr. Lee by cash of P2,000o in the ledger accounts is completely omitted. 3. The receipt of income in cash of P1,000 is recorded in the cash book as a payment by cash of P1,000, while the entry in the income account is made correctly. O (1) and (2) only O (1) and (3) only (2) and (3) only O (1), (2) and (3)

20. If the debit side of the trial balance is undervalued by P2,000 with the correct debit balance, which of the following are not the possible reasons? 1. The cash payment for the electricity bill of P2,000 is recorded as the payment for rates in the ledgers. 2. The transaction regarding the settlement of debt by Mr. Lee by cash of P2,000o in the ledger accounts is completely omitted. 3. The receipt of income in cash of P1,000 is recorded in the cash book as a payment by cash of P1,000, while the entry in the income account is made correctly. O (1) and (2) only O (1) and (3) only (2) and (3) only O (1), (2) and (3)

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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on 3 ts) Based on our discussions, why was the Allowance for Bad Debt created? O To record the amount of accounts receivable written off during the period. O To record the net amount of accounts receivable that will be paid. To record the amount of accounts receivable that will most likely never be paid. O To record the net sales amount from the last period that will probably never be paid.
Flora Co. uses the allowance method of accounting for uncollectible accounts receivable. The entry to write off an account that has been determined to be uncollectible would be to debit a. Allowance for Doubtful Accounts and credit Accounts Receivable. Ob. Sales Returns and Allowances and credit Accounts Receivable. c. Accounts Receivable and credit Bad Debt Expense. Od. Bad Debt Expense and credit Allowance for Doubtful Accounts.
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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
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Which of the following statements is false? a) An entry to write off an uncollectible account does not change the net realizable value of accounts receivable. b)The issuer ofa note records a receivable on their books on the date the note is issued. c)Using the allowance method of accounting for accounts receivables follows the matching concept. d)Recording an accrued asset for interest increases stockholders' equity.
Which of the following is correct regarding accrual basis of accounting? a. No bad debts are recognized because trade receivables are not recognized. b. Accrual sales is equal to cash sales plus collection of trade receivables. c. Accrual purchases is equal to cash purchases less purchases on account. d. Doubtful accounts are treated as bad debts.
1. When using the Allowance method to account for uncollectible accounts, between the income statement approach and the balance sheet approach, which is more accurate in your opinion? Fully support your answer with sound research. 2. Can the Allowance account be used to misinterpret a company's financial results? How so? Provide at least one example of how a company might accomplish this. 3. Suppose a company accepts a Note Receivable in lieu of an Accounts Receivable. How would the company record this transaction? Provide an example and related journal entry. (You may not use the examples from the textbook.)
A trial balance does not balance. The owner believes the following mistakes WOULD cause animbalance. Do you agree? (Answer TRUE or FALSE for each statement) A. The owner forgot to record a cash saleB. A credit sale was recorded as a debit to sales and a debit to trade receivablesC. When transferring the bank overdraft from the Cash T account it was entered on thedebit side of the trial balanceD. Rates expense of £500 was debited to rent expenses and credited to cashE. A payment to a supplier of £690 was entered to cash as £690 but to trade payables as£609