Discuss the (a) focus and (b) financial statement emphasis of the percent of sales and the analysis of receivables methods of estimating bad debts.
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Discuss the (a) focus and (b) financial statement emphasis of the percent of sales and the analysis of receivables methods of estimating
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- Which of the following estimation methods considers the amount of time past due when computing bad debt? A. balance sheet method B. direct write-off method C. income statement method D. balance sheet aging of receivables methodWhich 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 methodWhat information can best be elicited from a receivable ratio? A. company performance with current debt collection B. credit extension effect on cash sales C. likelihood of future customer bankruptcy filings D. an increase in future credit sales to current customers
- Which account type is used to record bad debt estimation and is a contra account to Accounts Receivable?Briefly explain the difference between the income statement approach and the balance sheet approach to estimating bad debts.Which of the following methods may not be appropiate for estimating bad debt expense? a. percentage of net credit sales b. percentage of outstanding accounts receivable c. aging of accounts receivable d. percentage of sales
- Which method of recording bad debt loss is consistent with accrual accounting? A. Allowance method B. direct write off method C. Percent of sales method D. Percent of accounts receivable methodWhich of the following methods may not be appropiate for estimating bad debt expense? a. Percentage of net credit sales b. Percentage of outstanding accounts receivables c. Aging of accounts receivables d. Percentage of salesDesceibe income statement approach for estimating bad debts.
- In accounting for bad debts, how do the income statement approach and the balance sheet approach differ?Which of the following relationships best describes the percentage of receivables basis of valuing accounts receivable? O A. Matching, emphasis on statement of financial position relationships. O B. Matching, emphasis on income statement relationships. Oc. Cash realizable value, emphasis on statement of financial position relationships. O D. Cash realizable value emphasis on income statement relationships.Distinguish the difference between Bad Debts and Provision for Doubtful Debts, indicating the accounting treatment given to an increase/decrease in the Provision for Doubtful Debts and the impacts generally on Income Statements and Statements of Financial Statements.