6 the allowance method of accounting for bad debts is required by gaap because of th 4309598

6) The allowance method of accounting for bad debts is required by GAAP because of the materiality principle.

7) The contra-account, Allowance for Doubtful Accounts, is credited when journal entries are made for estimates of bad debts.

8) The percent of sales method is the only method allowed by GAAP to estimate the amount of uncollectible accounts.

9) The net realizable value of accounts receivable is computed by subtracting the allowance for doubtful accounts from the amount in the accounts receivable control account.

10) When using the aging method, the amount calculated to be the uncollectible accounts is the amount used for the adjusting entry at the end of the period.

11) There are two methods for accounting for uncollectible receivables.

12) Receivables of a company CANNOT be long-term assets.

13) Which is NOT a benefit to extending credit to customers?

A) Bad debt expenses

B) Increased revenues

C) Increased profits

D) Wider range of customers

14) When a customer fails to pay on their account, it creates a(n):

A) note receivable.

B) uncollectible account.

C) account receivable.

D) decrease in revenue.

15) What type of account is Allowance for Doubtful Accounts?

A) A contra- asset account

B) An expense account

C) A contra-liability account

D) A revenue account

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