Question

What is the type of account and normal balance of Allowance for Doubtful Accounts?

a.contra asset, debit

b.asset, credit

c.asset, debit

d.contra asset, credit

To record estimated uncollectible receivables using the allowance method, the adjusting entry would be a

a.debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts

b.debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable

c.debit to Loss on Credit Sales and a credit to Accounts Receivable

d.debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts

A company uses the allowance method to account for uncollectible accounts receivable. When the firm writes off a specific customer's account receivable

a.total expenses for the period are increased

b.total current assets are reduced

c.there is no effect on total current assets or total expenses

d.net realizable value of accounts receivable increases

Under the allowance method of accounting for uncollectible receivables, writing off an uncollectible account

a.affects only balance sheet accounts

b.affects both balance sheet and income statement accounts

c.affects only income statement accounts

d.is not an acceptable practice

If the maker of a promissory note fails to pay the note on the due date, the note is said to be

a.displaced

b.dishonored

c.discounted

d.disallowed

Answer 1

What is the type of account and normal balance of Allowance for Doubtful Accounts?
a.contra asset, debit
b.asset, credit
c.asset, debit
d.contra asset, credit	Correct	The allowance for doubtful accounts account is a contra asset account and its normal balance is a credit balance
To record estimated uncollectible receivables using the allowance method, the adjusting entry would be a
a.debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts
b.debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable
c.debit to Loss on Credit Sales and a credit to Accounts Receivable
d.debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts	Correct	The journal entry for the Bad Debt Expense increases (debit) the expense’s balance, and the Allowance for Doubtful Accounts increases (credit) the balance in the Allowance.
A company uses the allowance method to account for uncollectible accounts receivable. When the firm writes off a specific customer's account receivable
a.total expenses for the period are increased
b.total current assets are reduced
c.there is no effect on total current assets or total expenses	Correct	The allowance for doubtful accounts is a contra asset account and is subtracted from Accounts Receivable to determine the Net Realizable Value of the Accounts Receivable account on the balance sheet
d.net realizable value of accounts receivable increases
Under the allowance method of accounting for uncollectible receivables, writing off an uncollectible account
a.affects only balance sheet accounts	Correct	The entry to write off a bad account affects only balance sheet accounts: a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable. No expense or loss is reported on the income statement
b.affects both balance sheet and income statement accounts
c.affects only income statement accounts
d.is not an acceptable practice
If the maker of a promissory note fails to pay the note on the due date, the note is said to be
a.displaced
b.dishonored	Correct
c.discounted
d.disallowed