Name:
Class:
Date:
Indicate whether the statement is true or false.
1. The book value of accounts receivable must be a reasonable and unbiased estimate of the money the business expects to
collect in the future.
a.
True
b.
False
2. The adjusting entry for uncollectible accounts reduces the balance of the Accounts Receivable account.
a.
True
b.
False
3. The accounting concept Neutrality is applied when the process of making accounting estimates is free from bias.
a.
True
b.
False
4. A note provides a business with legal evidence of a debt in the event it becomes necessary to go to court to collect.
a.
True
b.
False
5. When using the allowance method, writing off an uncollectible account does not change the net realizable value of
accounts receivable.
a.
True
b.
False
6. The direct write-off method complies with generally accepted accounting principles.
a.
True
b.
False
7. The expense of an uncollectible account should be recorded in the accounting period that the account becomes
uncollectible.
a.
True
b.
False
8. A business having a $400.00 debit balance in Allowance for Uncollectible Accounts and estimating its uncollectible
accounts using accounts receivable aging to be $5,000.00 would record a $5,400.00 credit to Allowance for Uncollectible
Accounts.
a.
True
b.
False
9. When a customer account is written off under the allowance method, the book value of accounts receivable decreases.
a.
True
b.
False
10. Interest rates are stated as a percentage of the principal.
a.
True
b.
False
Name:
Class:
Date:
11. Interest income is classified as revenue from normal operations.
a.
True
b.
False
12. The account Allowance for Uncollectible Accounts has a natural credit balance.
a.
True
b.
False
13. A business usually knows at the end of the fiscal year which customer accounts will become uncollectible.
a.
True
b.
False
14. The account Allowance for Uncollectible Accounts is reported on the income statement.
a.
True
b.
False
15. The direct write-off method matches the expense of uncollectible accounts to the revenue that is earned in the same
period.
a.
True
b.
False
16. A business having a $400.00 debit balance in Allowance for Uncollectible Accounts and estimating its uncollectible
accounts using accounts receivable aging to be $5,000.00 would record a $5,400.00 credit to Allowance for Uncollectible
Accounts.
a.
True
b.
False
17. Total assets are reduced when a business accepts a note receivable from a customer needing an extension of time to
pay an account receivable.
a.
True
b.
False
18. The allowance method of accounting for uncollectible accounts does not comply with generally accepted accounting
principles.
a.
True
b.
False
19. The percent of each age group of an accounts receivable aging that is expected to become uncollectible is determined
by generally accepted accounting principles.
a.
True
b.
False
Directions: Select the one term that best fits each definition. Print the letter identifying your choice on the line to the left
of the statement.
a.
aging of accounts receivable
Name:
Class:
Date:
b.
allowance method
c.
book value
d.
book value of accounts receivable
e.
dishonored note
f.
interest income
g.
interest rate
h.
maker of a note
i.
maturity date
j.
maturity value
k.
net realizable value
l.
note payable
m.
note receivable
n.
payee
o.
percent of accounts receivable method
p.
percent of sales method
q.
principal
r.
promissory note
s.
time of a note
t.
writing off an account
20. Crediting the estimated value of uncollectible accounts to a contra account.
21. The difference between the balance of Accounts Receivable and its contra account, Allowance for Uncollectible
Accounts.
22. The difference between an asset’s account balance and its related contra account.
23. The amount of accounts receivable a business expects to collect.
24. A method used to estimate uncollectible accounts receivable that assumes a percent of credit sales will become
uncollectible.
25. A method that uses an analysis of accounts receivable to estimate the amount that will be uncollectible.
26. Analyzing accounts receivable according to when they are due.
27. Canceling the balance of a customer account because the customer does not pay.
28. A written and signed promise to pay a sum of money at a specified time.
29. A promissory note signed by a business and given to a creditor.
30. A promissory note that a business accepts from a customer.
31. The person or business that signs a note and thus promises to make payment.
32. The person or business to whom the amount of a note is payable.
Name:
Class:
Date:
33. The original amount of a note, sometimes referred to as the face amount.
34. The percentage of the principal that is due for the use of the funds secured by a note.
35. The date on which the principal of a note is due to be repaid.
36. The length of time from the signing date of a note to the maturity date.
37. The amount that is due on the maturity date of a note.
38. The interest earned on money loaned.
39. A note that is not paid when due.
Name:
Class:
Date:
Name:
Class:
Date: