50.1K

Verified Solution

Link Copied!

Accounting True or False

1.Notes receivable are sometimes used to settle a customers accounts receivable.

4Question 3 options:

	True
	False

2.The allowance method is required by generally accepted accounting principles and the direct write-off method is not allowed.

Que stion 4 options:

	True
	False

3.Interest revenue collected on a note receivable is considered an additional sale. (okay, this is false because we arent the business of selling loans. So to us, this is an other income and not a sale - answer this false.)

Question 5 options:

	True
	False

4. Allowance for doubtful accounts is a contra-asset account with a credit balance.

Question 6 options:

	True
	False

5. The entry to write off an uncollectible account under the allowance method reduces net income.

Question 7 options:

	True
	False

6.It is possible to have a debit or credit balance in the allowance for doubtful accounts prior to adjustment.

Question 8 options:

	True
	False

7.When a previosly written off account is collected, the first of a two step process is to reverse the write off, and then receipt the cash collected.

Question 9 options:

	True
	False

8.A claim supported by a note has a stronger legal claim than an account receivable.

Question 10 options:

	True
	False

9.Credit limits are determined by the credit worthiness of the customer.

Question 11 options:

	True
	False

10.The allowance method estimates uncollectible accounts expense prior to write-off.

Question 12 options:

	True
	False

11.The direct write-off method and the allowance methods are different names for the same accounting technique.

Question 13 options:

	True
	False

12.Businesses grant credit in order to attract customers that would not otherwise purchase the companys goods and services.

Question 14 options:

	True
	False

13.The number of days sales in receivables is a measure of the time receivables have been outstanding.

Question 15 options:

	True
	False

Answer & Explanation Solved by verified expert

See Answer