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college accounting a practical approach

Questions and Answers of College Accounting A Practical Approach

Accumulated Depreciation is a current asset. True/False LO.1
Long-term liabilities are due within one year. True/False LO.1
Merchandise Inventory is a temporary account. True/False LO.1
The normal balance of merchandise inventory is a debit. True/False LO.1
The post-closing trial balance will not contain any unearned revenue accounts. True/False LO.1
Ending inventory is closed directly to Capital. True/False LO.1
Reversing entries cannot be applied to all adjustments. True/False LO.1
Reversing entries are optional at end of each month before close of year. True/False LO.1
Reversing entries switch closing entries the first day of new period. True/False LO.1
An adjusting entry with an asset decreasing with no prevoius balance cannot be reversed. True/False LO.1
Closing entries will update the merchandise inventory account. True/False LO.1
Beginning merchandise inventory of a period is assumed sold by end of the period. True/False LO.1
An adjusting entry for Accrued Wages can be reversed. True/False LO.1
Bad Debts Expense isa_account. LO.1
Allowance for Doubtful Accounts is categorized asa_ LO.1
_equals Accounts Receivable less Allowance for Doubtful Accounts. LO.1
When writing off an account in the allowance method, theaccount_ _isnot involved. LO.1
In the allowance method, to estimate bad debts may use eitherthe_ _orthe_approach. LO.1
In the income statement approach, any existing balance in the Allowance for Doubtful Accounts is_. LO.1
_ classifies customers’ accounts according to days past due. LO.1
_method does not match accrual accounting. LO.1
_is a revenue account found in the other income section of an income statement. LO.1
An unusual balance inthe_ _indicatesthat the estimate for bad debts was too low. LO.1
Bad Debts Expense is classified as other revenue. True/False LO.1
The direct method has no allowance account. True/False LO.1
The direct method follows the matching principle. True/False LO.1
The normal balance of Allowance for Doubtful Accounts is a credit. True/False LO.1
In the direct method, the account Bad Debts Recovered is used when an account is reinstated only in the same year the sale is made. True/False LO.1
When an account is written off in the allowance method, Bad Debts Expense is debited. True/False LO.1
The balance sheet approach of estimating bad debts using the allowance method will adjust the balance in the allowance account. True/False LO.1
Net Realizable Value equals Accounts Receivable plus the Allowance for Doubtful Accounts. True/False LO.1
The direct write-off method requires the allowance account. True/False LO.1
Bad Debts Expense is found on the income statement. True/False LO.1
In the direct method, Accounts Receivable is recorded at net. True/False LO.1
The income statement approach may estimate Bad Debts Expense on a percent of net credit sales. True/False LO.1
Aging the Accounts Receivable can only be used in the direct write-off method. True/False LO.1
A debit to Bad Debts Expense and a credit to the Allowance for Doubtful Accounts means a customer’s account has been declared uncollectible. True/False LO.1
Using the allowance method, a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable means that an accounts receivable is thought to be uncollectible. True/False LO.1
Using the direct write-off method, a debit to Bad Debts Expense and a credit to Accounts Receivable means a customer’s account is thought to be uncollectible. True/False LO.1
A debit to Accounts Receivable and a credit to Bad Debts Recovered means that a bad debt has been recovered in the same year as the sale. True/False LO.1
The direct write-off method does not show net realized value. True/False LO.1
Net realizable value is recorded on the income statement True/False LO.1
The Direct Write-off Method is really part of the allowance method. True/False LO.1
Discount on Notes Payable records interest deducted in advance. True/False LO.1
The normal balance of Discount on Notes Payable is a debit. True/False LO.1
Adjustment for accrued interest must be reversed at start of new year. True/False LO.1
Interest-bearing notes cannot overlap different accounting periods. True/False LO.1
Proceeds = Maturity Value - Bank Discount. True/False LO.1
Maturity value is always principal plus interest. True/False LO.1
Contingent liability means that the one discounting the note has no further liability. True/False LO.1
A protest fee could result if a note is dishonored at maturity. True/False LO.1
An endorsement without recourse could result in one having contingent liability. True/False LO.1
The proceeds of a note can never be less than the maturity value. True/False LO.1
Bank Discount = MV times Bank Discount Rate times 360. True/False LO.1
The discount period represents the number of days the bank holds the note until maturity. True/False LO.1
The process of discounting results in the exchange of a note for another note. True/False LO.1
Interest Income is reported on the balance sheet. True/False LO.1
Only unmatured notes are in the Notes Receivable account. True/False LO.1
Subsidiary ledgers are required for Notes Receivable and Payable. True/False LO.1
Notes Payable is always a long-term liability on the balance sheet. True/False LO.1
The maturity date of a note can be determined by tables. True/False LO.1
There are 92 days between June 1 and September True/False LO.1
All interest calculations must use 360 days. True/False LO.1
Describing how the Bad Debts Expense account and the Allowance for Doubtful Accounts account are used to record bad debts, (p. 521)LO.1
Using the income statement approach and the balance sheet approach to estimate the amount of Bad Debts Expense, (p. 523)Preparing an Aging of Accounts Receivable, (p. 525)LO.1
Writing off an account using the Allowance for Doubtful Accounts account, (p. 527)LO.1
Using the direct write-off method, (p. 528)LO.1
The Bad Debts Expense account should be updated only when the cus¬ tomer’s debt is declared to be uncollectible.LO.1
The Allowance for Doubtful Accounts is a contra-asset account on the bal¬ ance sheet.LO.1
Bad Debts Expense is part of cost of goods sold.LO.1
Net realizable value equals Accounts Receivable less Allowance for Doubtful Accounts.LO.1
When a customer’s debt is written off as uncollectible, the account Allowance for Doubtful Accounts is credited.LO.1
When an account using the Allowance for Doubtful Accounts method is written off in a period following the sale, the result is a debit to Bad Debts Expense and a credit to Accounts Receivable.LO.1
The direct write-off method will sometimes use the Allowance for Doubtful Accounts.LO.1
When an account is written off (using the Allowance for Doubtful Accounts method), net realizable value is unchanged.LO.1
Bad Debts Recovered is an asset.LO.1
A debit balance in the Allowance for Doubtful Accounts indicates that the estimate for Bad Debts Expense was too low.LO.1
The two approaches to estimating Bad Debts Expense are the income statement approach and the balance sheet approach.LO.1
The income statement approach estimates Bad Debts Expense based on a percent of net sales. (Some companies use credit sales, some use total sales.) The balance is ignored in the Allowance for
The balance sheet approach estimates the balance required in the Allowance for Doubtful Accounts by aging the Accounts Receivable. The balance in the Allowance account will have to be adjusted based
When an account is written off (using the Allowance account) in years fol- | After the write-off, net real¬ lowing the sale, the result is to debit the Allowance for Doubtful Accounts 3 izable value
When an uncollectible account has been written off and is now recovered, the entry reverses the original write-off by debiting Accounts Receivable and crediting the Allowance for Doubtful Accounts.
The direct write-off method will recognize the Bad Debts Expense when the customer account is declared uncollectible. The direct method does not use the Allowance for Doubtful Accounts, because no
Bad Debts Recovered is classified as “other revenue” when a customer account is reinstated after being written off in the direct method.LO.1
Explain the matching principle in relationship to recording Bad Debts Expense.LO.1
What is the purpose of the Allowance for Doubtful Accounts?LO.1
What is net realizable value?LO.1
When an Account Receivable is written off, Bad Debts Expense must be debited. True or false? Please discuss.LO.1
Explain why the Allowance for Doubtful Accounts is a contra-asset account.LO.1
Recording Bad Debts Expense is a closing entry. True or false? Defend your position.LO.1
The income statement approach used to estimate bad debts is based on Accounts Receivable on the balance sheet. Accept or reject. Why?LO.1
In which approach is the balance of the Allowance for Doubtful Accounts considered when the estimate of Bad Debts Expense is made? Please explain.LO.1
Why would a company age its Accounts Receivable?LO.1
Using the Allowance for Doubtful Accounts method, what journal entries would be made to write off an account as well as later record the recovery of the Accounts Receivable?LO.1
Why doesn’t net realizable value change when an account is written off in the use of the Allowance account?LO.1
What is the purpose of using a direct write-off method?LO.1
Explain the purpose of the Bad Debts Recovered account.LO.1
Determining interest calculations and maturity dates on notes, (p. 542)LO.1
Journalizing entries to record renewal of a note, dishonoring of a note, eventual receipt of payment, and note given in exchange for equipment purchased, (p. 547)LO.1
Discounting an interest-bearing note receivable and recording a discounted note that has been dishonored, (p. 551)LO.1

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