Question

QUESTION 1

A method of estimating bad debts that focuses on the balance sheet rather than the income statement is the allowance method based on

a.	direct write-off
b.	aging the trade receivable accounts
c.	credit sales
d.	specific accounts determined to be uncollectible

QUESTION 2

The amount reported as "Cash" on a company's balance sheet normally should exclude

a.	postdated checks that are payable to the company
b.	cash in a payroll account
c.	undelivered checks written and signed by the company
d.	petty cash

Answer 1

Solution:

1

Aging the trade receivables account

2.

Postdated checks that are payable to the company

Explanation:

1.

A method of estimated baddebts that focuses on the balancesheet rather than the income statemnent is the allownace method based on aging the trade receivables accounts The follwing entry would be made when previously defaulted customers pay its outstanding balance debit the accounts receivable and credit the allowance for uncollecitble accounts

2.

The amount reported as cash on the company's balancesheet should include cash in a payroll account, Undelivered checks written and signed by the company and petty cash but exclude the postdated checs that are payable to the company because cash is not received.