QUIZ 3 : ACCOUNTING FOR RECEIVABLES

What are the double entries to record bad debt?

• dr. Bad Debt, cr. Allowance for Doubtful Debts

• dr. Profit and Loss, cr. Bad Debt

• dr. Bad debt, cr. Profit and Loss

• dr. Bad debt, cr. Accounts Receivable

What effect does bad debts have on debtors?

• it increases debtors

• it decreases debtors

• it has no effect on debtors

• none of the above

The double entries to record an increase in allowance for bad debts are?

• dr. Accounts Receivables, cr. Allowance for doubtful debts

• dr. Bad debt, cr. Allowance for doubtful debts

• dr. Allowance for bad debt, cr. Accounts Receivables

• dr. Allowance for doubtful debts, cr. Bad debt

What are the double entries to record a decrease in allowance for doubtful debts?

• dr. Accounts Receivables, cr. Allowance for doubtful debts

• dr. Bad debts, cr. Allowance for doubtful debts

• dr. Allowance for doubtful debts, cr. Decrease in Allowance for doubtful debts

• dr. Allowance for doubtful debts; cr. Accounts Receivables

• dr. Decrease in Allowance for doubtful debts, cr. Allowance for doubtful debts

1 Jan Allowance for doubtful debts RM500

31 Dec Allowance for doubtful debts RM400

How should the decrease in the allowance be treated in the Profit and Loss account?

• add RM400 to expenses

• add RM500 to expenses

• deduct the RM100 increase in allowance from expenses

• add the RM100 decrease in allowance to Gross Profit

Accounts Receivables :

2019 : RM2800;

2020 : RM3100

Allowance for doubtful debts :

2019 : RM280

2020: RM310

What is Net Realizable value for Accounts Receivables should appear in the Statement of Financial Position for 2020?

• RM2520

• RM2790

• RM2510

• RM3410

Bad debts can be classified as:

• a current asset

• a current liability

• an expense

• a revenue

What are the double entries to create a Allowance for doubtful debts?

• dr. Allowance for doubtful debts, cr. Accounts Receivables

• dr. Bad debts, cr. Allowance for doubtful debts

• dr. Allowance for doubtful debts, cr. Bad debts

• dr. Accounts Receivables, cr. Allowance for doubtful debts

Accounts Receivables :

Year 1 : RM10,000

Year 2: RM12,000

Allowance for doubtful debts is 5% of Accounts Receivables.

What is the amount of the bad debts expenses to be charged in the Profit and Loss account for the second year?

• RM100

• RM600

• RM500

• RM400

When the allowance method is used to account for uncollectible accounts, Bad Debt Expense is debited when

• a sale is made.

• an account becomes bad and is written off.

• management estimates the amount of uncollectibles.

• a customer's account becomes past-due.