Chapter 14: Accounting for Uncollectible Accounts Receivable

With each sale on account, a business takes the risk that the customer will never pay the amount owed.

• True

• False

Accurate financial reporting requires that expenses be recorded in the same fiscal period in which the expenses contribute to earning revenue. Which accounting concept is this?

Some businesses refer to uncollectible accounts as __.

• cliff hangers

• bad debts

• unpaid debts

• uncollectible debts

When journalizing the adjusting entry to record uncollectible accounts what account is credited?

• Uncollectible Accounts Expense

• Accounts Receivable

• Allowance for Uncollectible Accounts

• Notes Receivable

The account Allowance for Uncollectible Accounts is classified as a(n) __.

• Liability

• Contra Liability

• Asset

• Contra Asset

Allowance for Uncollectible Accounts is related to which account?

• Accounts Receivable

• Notes Receivable

• Cash

• Accounts Payable

The percent of sales method assumes that a percent of credit sales will become uncollectible.

• True

• False

The accounting concept __ is applied when the process of making accounting estimates is free from bias.

The first step in using the percent of accounts receivable method is to total accounts by "age" group.

• True

• False

The source document for the uncollectible accounts adjustment is a(n) __.

• Memorandum

• Receipt

• Check

• There isn't a source document