QUESTIONS writing off an uncollectible account receivable when the allowance method is used? 1. What is the difference be- tween accounts receivable and notes receivable? 2. What is the net realizable value of receivables? 3. What type of account is the Allowance for Doubtful Accounts? 4. What are two ways in which estimating uncol- lectible accounts improves the accuracy of the finan- cial statements? 5. When using the allowance method, why is uncollect- ible accounts expense an estimated amount? 6. What is the most com- mon format for reporting accounts receivable on the balance sheet? What information does this method provide beyond showing only the net amount? 7. Why is it necessary to reinstate a previously written-off account receiv- able before the collection is recorded? 8. What are some factors considered in estimating the amount of uncollectible accounts receivable? 9. What is the effect on the Accounting equation of recognizing uncollectible accounts expense? 10. What is the effect on the accounting equation of 11. How does the recovery of a previously written-off account affect the income statement when the allow- ance method is used? How does the recovery of a pre- viously written-off account affect the statement of cash flows when the allowance method is used? 12. What is the advantage of using the allowance method of accounting for uncollectible accounts? 13. How do companies deter- mine the percentage esti- mate of uncollectible accounts when using the percent of revenue method? 14. What is an advantage of using the percent of receive ables method of estimating uncollectible accounts expense? 15. What is "aging of accounts receivable"? 16. What is a promissory note? 17. Define the following terms: a. Maker b. Payee c. Principal d . Interest e. Maturity date 1. Collateral 18. What is the formula for computing interest revenue? 19. What is accrued interest? 20. How does the accrual of interest revenue or expense illustrate the matching concept? 21. Assets are listed on the bal- ance sheet in the order of their liquidity. Explain this statement. 22. When is an adjusting entry for accrued interest gener ally recorded? 23. Assume that on July 1, 2018, Big Corp. loaned Little Corp. $12,000 for a period of one year at 6 percent interest. What amount of interest revenue will Big report for 2018? What amount of cash will Big receive upon maturity of the note? 24. In which section of the statement of cash flows will Big report the cash collected in Question 23? 25. Why is it generally ben- eficial for a business to accept major credit cards as payment for goods and services even when the fee charged by the credit card company is substantial? 26. What types of costs do businesses avoid when they accept major credit cards as compared with handling credit sales themselves? 27. Name and describe the four cost flow methods discussed in this chapter. 28. What are some advantages and disadvantages of the specific identification method of accounting for inventory? 29. What are some advantages and disadvantages of using the FIFO method of inven- tory valuation? 30. What are some advantages and disadvantages of using the LIFO method of inven- tory valuation? 31. In an inflationary period, which inventory cost flow method will produce the highest net income? Explain. 32. In an inflationary period, which inventory cost flow method will produce the largest amount of total as- sets on the balance sheet? Explain. 33. What is the difference between the flow of costs and the physical flow of goods
