Which statement(s) is(are) correct?
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Statement 1: In case there is a credit balance in a customer's account, such amount shall not affect the total balance of the accounts receivable to be presented in the asset section of the statement of financial position.
Statement 2: A credit balance in a customer's account is caused by overcollection of amounts receivable from customers which will result to a liability to be presented in the noncurrent section of statement of financial position.
Which statement(s) is(are) correct?
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- Which method delays recognition of bad debt until the specific customer accounts receivable is identified? A. income statement method B. balance sheet method C. direct write-off method D. allowance methodWhen an account is written off under the allowance method, there should be a debit to Bad Debt Expense.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 following statement is a correct statement about the direct write-off method for calculating credit loss expense? A. It is in accordance with GAAP. B. It uses an allowance for credit losses account. C. It tends to understate accounts receivable on the balance sheet. D. It recognizes credit loss expense when a specific account is determined to be uncollectible.when a company receives a deposit from a customer to protect itself against nonpayment for future services, the deposit should be classified by the company as: a. revenue b. a liability c. part of the allowance for doubtful accounts d. a deferred credit deducted from accounts receivable18. If a company employs the net method of recording accounts receivable from customers, then sales discounts taken should be reported as O a. a deduction from sales in the income statement. O b. an item of "other income and expense" in the income statement. O c. a deduction from accounts receivable in determining the net realizable value of accounts receivable. O d. should not be used.
- 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. Revenue recognition principle. b. Materiality quality. c. Consistency characteristic. d. Expense recognition principle.Which statement is false? a. The amount of Accounts Receivable pledged should be excluded from Accounts Receivable in the balance sheet. b. When Accounts Receivable are assigned on a notification basis, the company reduces liability and Accounts Receivable account for the net amount of collections of Accounts Rceivable. c. In factoring Accounts Receivable as a continuing agreement, the buyer of Accounts Receivable protects himself from risks arising from discounts, returns and allowances thru by withholding a portion of the amount of accounts receivable. e. none of the above Please explain.Which of the following concepts relates to using the allowance method in accounting for accounts receivable? Bad debt expense is management's determination of which accounts will be sent to the attorney for collection. а. O b. Bad debt expense is an estimate that is based on historical and prospective information. Ос. Bad debt expense is an estimate that is based only on an analysis of the receivables ageing. O d. Bad debt expense is based on the actual amounts determined to be uncollectible.
- 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.a. Determine the amount of the adjusting entry for uncollectible accounts. b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. c. Determine the net realizable value of accounts receivable.Using the following key, identify the effects of the following transactions or conditions on the various financial statement elements: I = increases; D = decreases; NE = no effect. A.credit sale b. Collection of a portion of accounts receivable c. Estimate of bad debts d. Write-off of a specific uncollectible account