Trade Receivables Flashcards
(4 cards)
1
Q
Direct write off method
A
Expenses bad debts when they are determined to be uncollectible.
Not allowed under GAAP.
2
Q
Allowance method
A
matches credit loss expense with related revenue
Credit loss exp XXX
allowance for credit losses XXX
Allowance for credit losses XXX
AR XXX
3
Q
On balance sheet the carrying amount of AR equals
A
Gross AR
-allowance for credit loss
4
Q
Collection on account previously written off is recorded as
A
Cash XXX
allowance for credit losses XXXX
