Which of the following statements is true regarding aging accounts receivable? Multiple Choice All of the statements are true. An aging schedule is used to improve the estimate used in the percent of revenue method f determining the uncollectible accounts expense. The aging of accounts receivable involves applying lower uncollectible percentage estimates to older receivables. The aging method of estimating uncollectible accounts based on the assumption that the longer an account receivable remains outstanding, the less likely it is to be collected.

Which of the following statements is true regarding aging accounts receivable? Multiple Choice All of the statements are true. An aging schedule is used to improve the estimate used in the percent of revenue method f determining the uncollectible accounts expense. The aging of accounts receivable involves applying lower uncollectible percentage estimates to older receivables. The aging method of estimating uncollectible accounts based on the assumption that the longer an account receivable remains outstanding, the less likely it is to be collected.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 10MC: Which of the following estimation methods considers the amount of time past due when computing bad...

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Which of the following best describes the concept of the aging method of receivables? a.An accurate estimate of bad debt expense may be arrived at by multiplying historical bad debt rates by the amount of credit sales made during a period. b.Accounts receivable should be directly written off when the due date arrives and the customers have not paid the bill. c.Estimating the appropriate balance for the allowance for doubtful accounts results in the appropriate value for net accounts receivable on the statement of financial position. d.The precise amount of bad debt expense may be arrived at by multiplying historical bad debt rates by the amount of credit sales made during a period.
6. Which method of estimating uncollectible accounts does not take the previous balance in the allowance account in to consideration? a. Percentage of account receivable method b. All the options c. Account receivable aging method d. Percentage of sales method
The percentage-of-receivables basis of estimating uncollectible accounts receivable emphasizes income statement relationships. ignores the existing balance in Allowance for Doubtful Accounts. produces a better estimate of cash realizable value. results in a better matching of expenses with revenues.
Choose the correct and explain. The following statements pertain to presentation and valuation of receivables. Which is not in accordance with generally accepted practice? a.Credit balances in customers’ account receivable should be offset against other receivables to arrive at the net amount. b.Receivable balances should be valued at face amount minus allowance for doubtful accounts and for any anticipated adjustments, which in the normal course of events will reduce the amount of receivable to estimated realizable value. c.Long-term notes receivables which nominally bear no interest or an interest, which is unreasonably low should be stated at present value. d.Receivables denominated in foreign currency should be translated to local currency using the exchange rate on reporting period.
What does the age of accounts receivable refer to? How can we use an aging method to estimate uncollectible accounts receivable?
Which of the following best describes the objective of estimating bad debt expense with the percentage of credit sales method? a.To estimate the amount of bad debt expense based on an aging of accounts receivable. b.To estimate bad debt expense based on a percentage of credit sales made during the period. c.To determine the amount of uncollectible accounts during a given period. d.To facilitate the use of the direct write-off method.
. 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…
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
Accounts receivable retention must be included in the calculations for the collection period? True or false. If true explain why? If False, explain why not?
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 method
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 method
Which account type is used to record bad debt estimation and is a contra account to Accounts Receivable?