When a large account receivable balance is due from one client it is logical to use the direct write-off method to adjust the bad debt expense and accounts receivable balance. Under different circumstances, another method is used called the allowance method. Discuss the best reason(s) for using the allowance method and give some examples of companies that are likely to use that method. Also explain why it would ever be appropriate to use the direct write-off method, especially since it is not GAAP.

When a large account receivable balance is due from one client it is logical to use the direct write-off method to adjust the bad debt expense and accounts receivable balance. Under different circumstances, another method is used called the allowance method. Discuss the best reason(s) for using the allowance method and give some examples of companies that are likely to use that method. Also explain why it would ever be appropriate to use the direct write-off method, especially since it is not GAA

Write the word "True" if the statement is correct and "False" if it is incorrect. 1. Debit memos are items added by the bank but have not been added by the book as of the cut-off date. 2. Credit memos are items that have been deducted by the bank but have not been deducted per book. 3. Debit memos are collections from receivables by the bank on behalf of the company and proceeds from loans directly added by the bank to the account of the depositor. 4. One of the internal control features in every company is a monthly bank reconciliation in which it is created to report that there is no discrepancy between the cash balance per book records and the cash balance per bank records. 5. After all, adjustments have been made. Reciprocal accounts should have the same balance. 6. Bank reconciliation statement is prepared to reconcile the difference between cash book and bank balance. 7. When a company has two bank account, only one bank reconciliation is prepared for all the accounts. 8. The…

If a company uses the direct write-off method of accounting for bad debts,a. it will report accounts receivable on the balance sheet at their net realizable value.b. it is applying the matching principle.c. it will reduce the Accounts Receivable account at the end of the accounting period for estimated uncollectible accounts.d. it will record bad debt expense only when an account is determined to be uncollectible.

2. Substantial amount of credit losses is due to poor loan monitoring. In view of this, suggest how might one safeguard a bank's interest when providing loans.

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.)  

What is Bank Overdraft?  1. A document used by a company's accounts payable department containing the supporting documents for an invoice.  2. A negotiable instrument where payment is guaranteed by the issuing bank.  3. A negotiable instrument similar to a bill of exchange.  4. A line of credit that covers your transactions if your bank account balance drops below zero.

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1. Which of the following is the primary reason why a company sells it receivables to another entity? a) to improve the quality of its credit granting process b) to comply with customer agreements c) to limit its legal ability d) to accelerate access to amount collected