Chapter 8 Flashcards
1
Q
3 types of receivables
A
Accounts receivables
Notes receivables
Other receivables
2
Q
Accounts recivable
A
Amounts for goods or services
3
Q
Notes Recivable
A
Written promise with interest
4
Q
Other receivables
A
Loans to officers or advances to employees
Or possibly income taxes
5
Q
Bad debit expense
A
Recorded operating expenses from uncollectible Receivable’s
6
Q
2 methods to account for uncollectible accounts
A
Direct write off
&
Allowance method
7
Q
Direct write off method
A
Only records or write-off once determined to be worthless
Does NOT comply with the “matching principle”
8
Q
Allowance Method
A
Estimated bad debt in same period as sales.
Debit- bad debit expenses
Credit- allowance for doubtful accounts
Contra asset accounts with normal credit balance.
Reduces value of accounts Recivable
