Using the direct write-off method.
1) The two methods of accounting for uncollectible receivables are the direct write-off method and the
A) equity method.
B) allowance method.
C) interest method.
D) cost method.
2) The two methods of accounting for uncollectible receivables are the allowance method and the
A) cost method.
B) interest method.
C) direct write-off method.
D) equity method.
3) In the direct write-off method, writing off an account causes
A) an increase in expense.
B) an increase in Accounts Receivable.
C) a decrease in the Allowance account.
D) an increase in Liabilities.
4) San Francisco Tours collected $90 on an account that had been directly written off the previous year. The journal entry to record the transaction would include
A) a debit to Allowance for Doubtful Accounts.
B) a debit to Bad Debts Recovered.
C) a credit to Bad Debts Recovered.
D) a credit to Bad Debts Expense.
5) A company is not able to reasonably estimate its bad debts expense. The method it may use is
A) net realizable value method.
B) direct write-off method.
C) aging method.
D) income statement method.
6) If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is credited to write off a customer's account as uncollectible?
A) Bad Debts Recovered
B) Bad Debts Expense
C) Accounts Receivable
D) Interest Expense
7) What would be the basis for the following entry on a firm's records?
Bad Debt Expense150
A) The firm is using the direct write-off method.
B) The firm is writing off an uncollectible account.
C) The firm is not using the allowance method for writing off accounts.
D) All of these answers are correct.
8) Stacy's Service Bureau is able to collect an amount previously written off last year under the direct method. The journal entry will
A) decrease Bad Debts Expense.
B) increase Bad Debts Recovered.
C) decrease Accounts Receivable.
D) decrease Cash.
9) If the direct write-off method is used, the debit account to write off an uncollectible is
A) Accounts Receivable.
B) Bad Debt Expense.
C) Allowance for Doubtful Accounts.
10) When all of the cash for an account previously written off under the direct write-off method is unexpectedly collected, the correct entry would be
A) debit Bad Debt Expense and credit Accounts Receivable.
B) debit Accounts Receivable and credit Bad Debt Expense.
C) debit Cash and credit Accounts Receivable.
D) dependent on the period in which the cash was collected.
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