True/False
Indicate whether the
statement is true or false.
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1.
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A business generally sells on account to encourage sales.
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2.
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At the end of the fiscal period, an adjustment for uncollectible accounts
expense is planned in the subsidiary ledger.
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3.
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Accounts receivable that cannot be collected are called uncollectible
accounts.
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4.
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A business usually knows at the time sales are made which customer accounts will
become uncollectible.
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5.
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Allowance for Uncollectible Accounts is a contra account to its related asset
account, Accounts Receivable.
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6.
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When an adjusting entry for uncollectible accounts expense is recorded,
Allowance for Uncollectible Accounts is credited.
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7.
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Using the percentage of total sales on account to estimate uncollectible
accounts expense assumes that a portion of every sale on account dollar will become
uncollectible.
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8.
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Canceling the balance of a customer account because the customer does not pay is
called writing off an account.
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9.
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Allowance for Uncollectible Accounts is debited to write off a customer
account.
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10.
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Accounts Receivable is debited to write off a customer account.
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11.
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When a previously written-off account is collected, Accounts Receivable is
debited and credited for the amount collected.
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12.
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When a customer account is written off under the allowance method, book value of
accounts receivable decreases.
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13.
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Three journal entries are recorded for the collection of a written-off account
receivable.
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14.
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When an account is determined to be uncollectible, no journal entry needs to be
made.
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15.
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The debit balance of the uncollectible accounts expense account is the estimated
uncollectible accounts from sales on account during the next fiscal year.
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16.
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The adjusting entry for uncollectible accounts affects the balance of the
accounts receivable account.
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17.
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The adjusting entry for uncollectible accounts expense is recorded at the
beginning of every accounting period.
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18.
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The percentage of total sales on account method of estimating uncollectible
accounts expense assumes that a portion of every sales dollar will become uncollectible.
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19.
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Recording an estimate of uncollectible accounts to the contra asset account and
the expense account is an application of the Realization of Revenue accounting concept.
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20.
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The amount of accounts receivable that is uncollectible is an expense.
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21.
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Allowing customers to buy now and pay later is an ineffective method for
increasing sales.
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22.
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Accounts Receivable is credited to write off a customer account.
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23.
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When an account is written off, the account balance is transferred to Allowance
for Uncollectible Accounts.
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24.
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When an account is collected that was previously written off, the account
receivable must be reopened.
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25.
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When a journal entry is made to cancel the customer account in the general
ledger account Accounts Receivable, the entry also cancels the customer account in the accounts
receivable ledger.
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26.
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The percentage used to estimate uncollectible accounts expense is specified by
the Internal Revenue Service.
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27.
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Entries resulting from cash received for a previously written-off account are
recorded in a cash receipts journal's special amount columns.
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28.
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When the allowance account has a previous credit balance, this previous balance
is subtracted from the amount of the adjustment for uncollectible accounts expense.
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29.
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The account Allowance for Uncollectible Accounts is increased by a debit.
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30.
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The balance of the account Allowance for Uncollectible Accounts is extended to
the Income Statement Credit column of the work sheet.
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Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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31.
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The loss from an uncollectible account is ____.
a. | a liability | c. | an asset | b. | a regular expense of doing
business | d. | a reduction in
revenue |
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32.
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When the percentage of total sales on account method is used, the estimated
uncollectible accounts expense is calculated by ____.
a. | multiplying total sales on account times the percentage | b. | dividing total sales
on account by the percentage | c. | multiplying total sales times the
percentage | d. | dividing total sales by the percentage |
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33.
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Estimating the percentage of uncollectible accounts expense at the end of a
fiscal period is an application of the accounting concept ____.
a. | Business Entity | c. | Realization of Revenue | b. | Objective
Evidence | d. | Matching Expenses
with Revenue |
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34.
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An Allowance for Uncollectible Accounts balance in the Trial Balance Credit
column of a work sheet means ____.
a. | there are no uncollectible accounts | b. | the estimate has not yet been
recorded | c. | previous fiscal period estimates have not yet been identified as
uncollectible | d. | equity has been maintained |
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35.
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When the allowance account in the Trial Balance column of a work sheet has a
credit balance, the amount of the adjustment is ____.
a. | deducted from the trial balance amount | b. | not recorded | c. | multiplied by
two | d. | added to the Trial Balance amount |
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36.
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Information used to journalize an uncollectible expense adjusting entry is
obtained from a work sheet's ____.
a. | Balance Sheet columns | c. | Adjustments columns | b. | Income Statement columns | d. | Trial Balance
column |
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37.
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The entry to journalize the uncollectible accounts expense adjusting entry is
debit Uncollectible Accounts Expense and credit ____.
a. | Accounts Receivable | b. | Cash | c. | Allowance for
Uncollectible Accounts | d. | none of the
above |
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38.
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When an account is determined to be uncollectible, ____.
a. | a journal entry is made to cancel the uncollectible account | b. | the account is
removed from the general ledger | c. | the amount is deducted from
sales | d. | the customer subsidiary ledger account is removed |
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39.
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Canceling the balance of a customer account because the customer does not pay is
____.
a. | an adjusting entry | c. | a closing entry | b. | writing off an account | d. | none of the
above |
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40.
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Writing off an account ____.
a. | decreases the balance of Accounts Receivable | b. | decreases the
balance of Uncollectible Accounts Expense | c. | increases the balance of Allowance for
Uncollectible Accounts | d. | increases the balance of
Cash |
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41.
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When uncollectible accounts are estimated, writing off an account ____.
a. | increases revenue | b. | increases expenses | c. | does not change the
book value of accounts receivable | d. | may increase expenses or decrease
revenue |
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42.
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The entry to write off an account receivable is recorded in the ____.
a. | sales journal | c. | cash payments journal | b. | cash receipts
journal | d. | general
journal |
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43.
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The journal entry to write off an account receivable account is debit Allowance
for Uncollectible Accounts and credit ____.
a. | Cash | c. | Uncollectible Accounts Expense | b. | Accounts Receivable | d. | none of the
above |
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44.
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The journal entry to reopen an account that has been written off is debit
Accounts Receivable and credit ____.
a. | Cash | b. | Allowance for Uncollectible
Accounts | c. | Uncollectible Accounts Expense | d. | none of the
above |
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45.
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The journal entry to record receipt of cash for an account previously written
off is debit Cash and credit ____.
a. | Accounts Receivable | b. | Allowance for Uncollectible
Accounts | c. | Uncollectible Accounts Expense | d. | none of the
above |
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46.
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After the entries are made to reopen a customer account and record collection of
the account, the customer account balance is ____.
a. | a debit | c. | zero | b. | a credit | d. | none of the
above |
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47.
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At the end of a fiscal period, the account debited to show the estimated amount
of uncollectible accounts is ____.
a. | Accounts Receivable | b. | Cash | c. | Uncollectible
Accounts Expense | d. | Allowance for Uncollectible Accounts |
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48.
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To reopen an account previously written off, ____.
a. | one general journal entry is recorded | b. | two general journal entries are
recorded | c. | no journal entries are recorded | d. | one general journal entry and one cash receipts
journal entry are recorded |
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49.
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At the end of a fiscal period, the account credited to show the estimated amount
of uncollectible accounts is ____.
a. | Cash | b. | Uncollectible Accounts
Expense | c. | Accounts Receivable | d. | Allowance for Uncollectible
Accounts |
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50.
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When the account Allowance for Uncollectible Accounts is used, a customer
past-due account is written off as uncollectible by ____.
a. | debiting Uncollectible Accounts Expense and crediting Accounts Receivable and the
customer account | b. | debiting Allowance for Uncollectible Accounts and crediting Accounts Receivable and
the customer account | c. | debiting Accounts Receivable and the customer
account and crediting Allowance for Uncollectible Accounts | d. | none of
these |
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