FAR 2

Question 1

Bad Debts

Answer 1

Need to reduce AR by MGMTs best estimate of the amount that will not be collected

Question 2

Allowance for Doubtful Accounts

Answer 2

Contra account that offsets another account. Normally has a credit balance

Question 3

JE To recognize periodic uncollectable accounts expense and provide allowance

Answer 3

(D) Bad debt exp
(C) Allowance for uncollectible accounts

Question 4

JE to write off uncollectable account

Answer 4

(D) Allowance for uncollectible accounts
(C) AR

Question 5

Effects of Inflation under LIFO

Answer 5

Higher COGS, Lower NI

Question 6

Effects of Inflation under FIFO

Answer 6

Lower COGS. Higher NI