Financial Accounting, Student Value Edition (5th Edition)
5th Edition
ISBN: 9780134728520
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
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Chapter 7, Problem 9SC
To determine
Identify the true statement regarding the direct write-off method of accounting for uncollectible.
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Students have asked these similar questions
Which of the following is a limitation of the direct write-off method of accounting for uncollectible?
The direct write-off method overstates assets on the balance sheet.
The direct write-off method does not match expenses against revenue very well.
The direct write-off method does not set up an allowance for uncollectible.
All of the above
Which of the following would not overstate current-period net income?a. Capitalizing an expenditure that should be expensed.b. Failing to record a liability as an expense.c. Failing to record a check paying an item in Vouchers Payable.d. All of the above would overstate net income.
Management can choose between two bases in calculating the estimated uncollectible
accounts under the allowance method. One basis emphasizes an income statement
viewpoint whereas the other emphasizes a statement of financial position viewpoint.
Identify the two bases and contrast the two approaches.
How do the different points of view affect the amount recognized as Bad Debts Expense
during the accounting period?
Chapter 7 Solutions
Financial Accounting, Student Value Edition (5th Edition)
Ch. 7.A - Prob. 1SECh. 7.A - Prob. 2SECh. 7.A - Prob. 3AECh. 7.A - Prob. 4AECh. 7.A - Prob. 5BECh. 7.A - Prob. 6BECh. 7.A - Prob. 7APCh. 7.A - Prob. 8BPCh. 7 - Which duties should be segregated in the...Ch. 7 - Prob. 2DQ
Ch. 7 - Prob. 3DQCh. 7 - Why does the allowance method of accounting for...Ch. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - How would the net realizable value of Accounts...Ch. 7 - Prob. 9DQCh. 7 - Prob. 10DQCh. 7 - Prob. 1SCCh. 7 - Prob. 2SCCh. 7 - Prob. 3SCCh. 7 - Prob. 4SCCh. 7 - Prob. 5SCCh. 7 - Prob. 6SCCh. 7 - Prob. 7SCCh. 7 - Prob. 8SCCh. 7 - Prob. 9SCCh. 7 - Prob. 10SCCh. 7 - Prob. 11SCCh. 7 - Prob. 12SCCh. 7 - Prob. 1SECh. 7 - Prob. 2SECh. 7 - Prob. 3SECh. 7 - Prob. 4SECh. 7 - Prob. 5SECh. 7 - Prob. 6SECh. 7 - Prob. 7SECh. 7 - Prob. 8SECh. 7 - Prob. 9SECh. 7 - Prob. 10SECh. 7 - Prob. 11SECh. 7 - Prob. 12SECh. 7 - Prob. 13SECh. 7 - Prob. 14SECh. 7 - Prob. 15SECh. 7 - Quick ratio (Learning Objective 7) 510 min....Ch. 7 - Prob. 17SECh. 7 - Prob. 18AECh. 7 - Prob. 19AECh. 7 - Prob. 20AECh. 7 - Prob. 21AECh. 7 - Prob. 22AECh. 7 - Prob. 23AECh. 7 - Prob. 24AECh. 7 - Prob. 25AECh. 7 - Prob. 26AECh. 7 - Prob. 27AECh. 7 - Quick ratio and current ratio (Learning Objective...Ch. 7 - Prob. 29AECh. 7 - Prob. 30BECh. 7 - Prob. 31BECh. 7 - Prob. 32BECh. 7 - Prob. 33BECh. 7 - Prob. 34BECh. 7 - Aging of accounts receivable allowance method...Ch. 7 - Prob. 36BECh. 7 - Prob. 37BECh. 7 - Prob. 38BECh. 7 - Prob. 39BECh. 7 - Quick ratio and current ratio (Learning Objective...Ch. 7 - Prob. 41BECh. 7 - Prob. 42APCh. 7 - Prob. 43APCh. 7 - Prob. 44APCh. 7 - Prob. 45APCh. 7 - Prob. 46APCh. 7 - Accounting for notes receivable (Learning...Ch. 7 - Prob. 48APCh. 7 - Prob. 49BPCh. 7 - Prob. 50BPCh. 7 - Prob. 51BPCh. 7 - Prob. 52BPCh. 7 - Prob. 53BPCh. 7 - Prob. 54BPCh. 7 - Prob. 55BPCh. 7 - Continuing Exercise In this exercise, we continue...Ch. 7 - Prob. 1CPCh. 7 - Prob. 1CFSAPCh. 7 - Prob. 1EIACh. 7 - Prob. 2EIACh. 7 - Financial Analysis Purpose: To help familiarize...Ch. 7 - Industry Analysis Purpose: To help you understand...Ch. 7 - Prob. 1SBACh. 7 - Prob. 1WC
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- Which of the following statements is false? Group of answer choices A)The journal entry to record bad debt expense decreases current assets. b)The journal entry to record bad debt expense decreases retained earnings. C)The journal entry to write-off an uncollectible account receivable decreases operating income. D)The journal entry to write-off an uncollectible account receivable does not affect current assets. e)All the above statements are correct.arrow_forwardwhat basic accounting principle is the basis for criticizing the direct charge off method for recording uncollectible accounts?arrow_forwardThe allowance for doubtful accounts, which appears as a deduction from accounts receivable on a statement of financial position and which is based on an estimate of bad debts, is an application of which of the following? a. Revenue recognition principle. b. Materiality quality. c. Consistency characteristic. d. Expense recognition principle.arrow_forward
- The allowance for doubtful accounts, which appears as a deduction from accounts receivable on a statement of financial position and which is based on an estimate of bad debts, is an application of which of the following? a. Expense recognition principle. b. Consistency characteristic. c. Materiality quality. O d. Revenue recognition principle.arrow_forwardWhich 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 methodarrow_forwardWhen an account is written off under the allowance method, there should be a debit to Bad Debt Expense.arrow_forward
- Which account type is used to record bad debt estimation and is a contra account to Accounts Receivable?arrow_forwardCompare and contrast the direct write-off method and the allowance method for bad debts. At a minimum, please consider the following in your answer: When is the expense for uncollected accounts receivable recognized under each method? Why is the direct write-off method not considered to follow generally accepted accountingarrow_forwardWhich among the statements is not correct? a. Net realizable value of accounts receivable results when accounts receivable is reduced by allowance for doubtful accounts b. Credit balances in accounts receivable arising from customer's advances should be excluded from accounts receivable c. The allowance method of recording bad debt loss is the one consistent with accrual accounting. d. answer not givenarrow_forward
- Which of the following statements is not correct regarding combined statement of financial position errors and income statement errors? a. It does not affect net income. b. It results to misstatement of the statement of financial position. c. It can be classified as counterbalancing errors and non-counterbalancing errors. d. It affects both real and nominal accounts.arrow_forwardWhat is the unique balance sheet disclosure that the Allowance Method requires, as opposed to the direct write-off method of accounting for bad debts? a) There is no balance sheet disclosure required – there is only an expense recognized on the income statement. b) The accounts receivable balance is reported gross instead of net c) An allowance for doubtful accounts is added to the balance sheet, which nets against gross accounts receivable. The net accounts receivable under this method represents the estimated balance that will actually be collected. d) Certain customers do not have to pay their balance under this method.arrow_forwardWhich of the following is not true about the Allowance for Doubtful Accounts? Multiple Choice It is a contra asset account. It is used instead of reducing accounts receivable directly. It is debited when uncollectible accounts are written off. It is a liability account. It is credited when bad debts is estimated and recorded.arrow_forward
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