Chapter 8

Question 1

Types of Receivables

Answer 1

Accounts Receivable
Notes Receivable
Other Receivables

Question 2

accounts receivable

Answer 2

Service organization records a
receivable when it performs service on account.

Merchandiser records accounts receivable at the point of sale of merchandise on account.

Question 3

Uncollectible Accounts Receivable

Answer 3

Sales on account raise the possibility of accounts not being collected.

Seller records losses that result from extending credit as Bad Debt Expense.

Question 4

Two methods are used in accounting for uncollectible accounts

Answer 4

(1) the direct write-off method and (2) the allowance method.

Question 5

Under the direct write-off method, when a company determines a particular account to be uncollectible, it charges the loss to Bad Debt Expense.

Answer 5

Under this method, Bad Debt Expense will show only actual losses from uncollectibles. The company will report accounts receivable at its gross amount.