Styles Paragraph Section A Directions: Each of the following statements is true or false. Indicate your choice by writing in the Answers column T for a true answer or F for a false answer. (2 points for each correct answer) For Answers Scoring 1. A major reason companies sell on account is to increase sales. 2. The more willing a business is to make sales on account, the more uncollectible accounts it is likely to have. 3. Bad debt expense is a loss from failure to collect an account receivable. 4. The allowance method is a technique that attempts to recognize bad debt expense in the same period that the related credit sales are made. 5. Net realizable value of accounts receivable is the amount the business has collected 6. The expense of extending credit to make a sale should be recognized in the same period as the revenue from the sale. 7. Under the cash basis of accounting, the allowance method is generally required for financial reporting purposes. 8. Under the direct write-off method, the write-off of an account affects the balance sheet and the income statement. 9. A company may switch every year from one method of estimating and writing off ur collectibles to another method 10. The net realizable value of accounts receivable is the amount a company is certain it will be able to collect from its customers. 11. The percentage of sales method is based on the relationship between the amount of accounts receivable at year end and the amount of uncollectible accounts 12. There are no disadvantages to the direct write-off method; therefore, that is the method that most companies use for recording uncollectible accounts