Question 1

1. Credit sales during the year were $425,000, the Allowance for Uncollectible Accounts had a beginning of year balance of $2,500 debit, accounts written off during the year were $2,200. It is estimated that 2% of all credit sales are eventually uncollectible. What is the ending balance in the Allowance for Uncollectible Accounts?

   		$8,800
   		$8,500
   		$8,200
   		$3,800

Question 2

1. The direct write-off method is not preferable to the allowance method because the direct write-off method:

   		may recognize expense of a bad debt in a different period than the sale.
   		reflects the actual facts as they have taken place.
   		relies on estimates which are always accurate and stable among years.
   		recognizes the expense of a bad debt in the same period as the sale.
   		None of these.

Question 3

1. How will the Allowance for Uncollectible Accounts account be shown on the financial statements?

   		As a deduction from accounts receivable on the income statement
   		As a deduction from accounts receivable on the balance sheet
   		As a deduction from sales revenue on the balance sheet
   		As a deduction from sales revenue on the income statement

Question 4

1. Using the direct write-off method for accounting for uncollectible accounts is not preferred by GAAP because it violates which accounting principle?

   		Cost principle
   		Matching principle
   		Revenue recognition principle
   		Objectivity principle