Can you explain briefly the difference between the accounting for receivables allowance methods for estimating bad debt (i.e. percentage of sales and percentage of receivables)?

The estimate of a bad debt expense may be based on the historical relationship between actual bad debts incurred and     Sales                          Accounts receivables a. Yes                                         No b. Yes                                         Yes c. No                                           Yes d. No                                           No

Answer the following questions in depth .... Isn't estimating bad debts a way of manipulating net income? How does a company keep control on these estimates? How does one go about determining if noncollectable receivables are within a reasonable range?

If the amount of bad debts is significant, use of the direct write-off method increases the usefulness of both the income statement and statement of financial position. Select one: True False

Accounts Receivable less Allowance for bad debts equals Oa Net appraised value OD Net book value Carrying amount Net realizable value

Discuss the theoretical weaknesses of the use of the direct write off method to account for bad debt expense. Provide 2 reasons.

Under the allowance method, estimated uncollected receivables are credited to?

When using the percentage of sales method to estimate the amount of bad debt expense for uncollectible accounts, what effect would a debit balance in Allowance for Doubtful Accounts have on the current period's adjusting entry? a.A debit balance would increase the amount of the current period's adjusting entry. b.A debit balance would decrease the amount of the current period's adjusting entry. c.The balance in Allowance for Doubtful Accounts would be ignored when making the current period's adjusting entry. d.A debit balance would be carried over to the next period.

Of the two methods of accounting for uncollectible receivables, the allowance method makes use of an estimate of uncollectible receivables. True False

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.