ANSWER SHOULD BE EITHER TRUE OR FALSE

(1) When posting is up-to-date, the balance in the accounts receivable subsidiary ledger must equal the balance in the general ledger.

(2) Allowance for Doubtful Accounts is credited when an account is determined to be uncollectible. (3) Bad Debts Expense is a contra account to the Sales account.

(4) Uncollectible accounts must be estimated because it is not possible to know which accounts will not be collected.

(5) Both the gross amount of receivables and the Allowance for Doubtful Accounts must be reported either in the statement of financial position or notes to the financial statements.

(6) The average collection period is frequently used to assess the effectiveness of a companys credit and collection policies.

(7) The receivables turnover should be analyzed in conjunction with other ratios such as the current ratio and inventory turnover.

(8) Accounts receivable can be the result of either cash or credit sales.

(9) The Allowance for Doubtful Accounts is a liability account and has a normal credit balance.

(10) It is possible for the allowance account to have a debit balance before the year-end adjusting entry is recorded.

(11) The percentage of receivables basis of estimating uncollectible accounts ignores the existing balance in the allowance account when the bad debts adjusting entry is recorded. (12) If eventual collection is expected after a note has been dishonoured an accounts receivable replaces the note including any unpaid interest.