Chapter 7 - Accounting for Receivables

Accounts Receivable refer to the amounts owed by customers due to credit sales transactions.

• True

• False

Accounts Receivable is known as a control account to many subsidiaries.

• True

• False

The uncollectible amount from Accounts Receivable is known as bad debts.

• True

• False

The death of a debtor is one of the reasons for his/her debts to be written-off.

• True

• False

State a proper credit term if the debtors will be given 2% discounts if making payment in 10 days after the transaction date and the credit period is 45 days.

• 0.02/10 ; no/45

• 2/10 ; n/eom

• 2/10 ; n/45

• 2%/10 ; n/45

Accounts Receivable is a current asset. Under which classification is bad debt?

• A contra account to Accounts Receivable

• Operational Expenses

• Other Expenses

• A contra account to Allowance for Doubtful Accounts

There are two methods in handling Accounts Receivable, Bad Debts and Allowance for Doubtful Accounts. What are those?.

• Written-off Method & Allowance Method

• Allowance for Doubtful Method & Bad Debt Method

• % on Accounts Receivable Method and % on Net Credit Sales Method

• Direct Write-off Method and Allowance Method

Allowance method does not comply to Expense Recognition Concept?

• True

• False

In direct write-off method, what is a general journal entry to record the uncollectible debts as Bad Debts Expense?

• dr Accounts Receivable

  cr Bad Debt Expense

• dr Bad Debt Expense

  cr Accounts Receivable

• dr Bad Debt Expense

  cr Allowance for Doubtful Accounts

• dr Allowance for Doubtful Accounts

  cr Accounts Receivable

Company make provision for doubtful debts in direct write-off method?

• True

• False