1. Accounts receivable is a/an ____________________ (asset/liability/equity/revenue/expense) account with a normal ____________________ balance. It is a ____________________ (temporary/permanent) account.

2. In general, accounts receivable is increased by ____________________ ____________________ ____________________ and decreased by ____________________. These are the two main transactions that are recorded in the accounts receivable account.

3. Under the ____________________ method, the full amount of the sale is recorded as A/R and revenue. Under the ____________________ method, the company assumes that the customer will take advantage of the cash discount and thus records the sale and related receivable ____________________ of the discount.

4. This account is only used under the net method in recording account sales transactions: ____________________ ____________________ ____________________. It is reported under what item on a multiple-step income statement? _______________________________________

5. There are two methods of accounting for uncollectible accounts receivable. The ____________________ ____________________ method does not match revenues and expenses in the same period and violates GAAP. Give an example of how this method violates GAAP.

6. The second method of accounting for uncollectible accounts receivable is called the ____________________ method. This method upholds the matching principle and is prescribed by GAAP.

Allowance Method

7. A company collects on its accounts receivable in accordance with its collection policies and procedures. When a customer defaults on his or her account, the company authorizes a ____________________.

8. Customers that have defaulted on paying their accounts receivable but want to continue doing business with a company may request to ____________________ their accounts. If the company decides to continue doing business with them, it will authorize a ____________________. However, it would be prudent for the company to ascertain collection of outstanding receivables from these customers before selling to them again.

9. A ____________________ of a receivable is usually followed quickly by a ____________________ of the receivable.

Estimating Bad Debt

10. Allowance For Doubtful Accounts is a/an ____________________ (asset/liability/etc.) account with a normal ____________________ balance. It is a ____________________ (temporary/permanent) account. Allowance For Doubtful Accounts is related to this account: ____________________.

11. Bad Debt Expense is a/an ____________________ (asset/liability/etc.) account with a normal ____________________ balance. It is a ____________________ (temporary/permanent) account.

12. Why does a company need to record bad debt expense?When does a company record bad debt expense?

13. The difference between Allowance For Doubtful Accounts and Bad Debt Expense is that _____________________________________________________________________________

_____________________________________________________________________________.

14. Under the allowance method, accounts receivable is reported at ____________________ ____________________ ____________________, which means _____________________________________________________________________________.

15. Show the presentation of accounts receivable on the balance sheet:

__________________________

________________________

= ________________________

16. Under the allowance method, these are the transactions that change the NRV of accounts receivable:
    1. _____________________________________
    2. _____________________________________
    3. _____________________________________

17. These transactions, ____________________ and ____________________, do not affect NRV.

18. An existing ____________________ balance in this account increases bad debt expense.On the other hand, an existing ____________________ balance in this account decreases bad debt expense.What account are we talking about? _________________________________________