The following list describes aspects of either the allowance method or the direct write-off method to account for bad debts. For each item listed, indicate if the statement best describes either the allowance method or the direct write-off method.

No attempt is made to predict bad debts expense

Accounts receivable on the balance sheet is reported at net realizable value

The write-off of a specific account does not affect net income

When an account is written off, the debit is to bad debts expense

Sales and any bad debts expense are usually not recorded in the same period, thus proper matching (of revenues and expense recognition) does not consistently occur

Requires a company to estimate bad debts expense related to the sales recorded in that period

Indicate whether a debit or credit decreases the normal balance of each of the following accounts.

Interest Payable

Service Revenue

Salaries Expense

Accounts Reveivable

Common Stock

Prepaid Insurance

Buildings

Interest Revenue

Dividends

Unearned Revenue

Accounts Payable

Land

Land

Identify whether a debit or credit yields the indicated change for each of the following accounts.

To increase Land

To decrease Cash

TO increase Fees Earned(revenues)

To increase office expense

To decrease Unearned Revenue

To decrease Prepaid Rent

To increase Notes Payable

To decrease accounts Receivable

To increase Common Stock

To increase Store equipment