4) Companies that use GAAP accounting will prefer the use of the direct write-off method. 5) Archer Company and Zorro Company both have significant amounts of accounts receivable at any time, and both...

4) Companies that use GAAP accounting will prefer the use of the direct write-off method.

5) Archer Company and Zorro Company both have significant amounts of accounts receivable at any time, and both experience uncollectible accounts from time to time.  Archer uses the percent-of-sales method to account for uncollectible accounts and Zorro uses the direct write-off method.  Archer Company's method complies with GAAP and produces a better matching of revenues and expenses than does Zorro Company's method.

6) Archer Company and Zorro Company both have significant amounts of accounts receivable at any time, and both experience uncollectible accounts from time to time.  Archer uses the aging-of-accounts method to account for uncollectible accounts and Zorro uses the direct write-off method.  Zorro Company's method complies with GAAP and produces a better matching of revenues and expenses than does Archer Company's method.

7) The direct write-off method requires an entry with a credit to Accounts receivable to record the uncollectible accounts expense.

8) The direct write-off method would be considered acceptable if uncollectible receivables are very low.

9) The following information is from the 2013 records of Armadillo Camera Shop:

Uncollectible accounts expense is estimated by the aging-of-accounts-receivable method.  Management estimates that $2,850 of accounts receivable will be uncollectible.  Which of the following will be the amount of Net accounts receivable after adjustment?

A) $17,750

B) $17,150

C) $16,550

D) $13,000

10) Which of the following entries would be used to account for uncollectible receivables using the direct write-off method?

A) Uncollectible accounts expense is debited and Accounts receivable is credited.

B) Allowance for uncollectible accounts is debited and Uncollectible accounts expense is credited.

C) Accounts receivable is debited and Uncollectible accounts expense is credited.

D) Uncollectible accounts expense is debited and Allowance for uncollectible accounts is credited.

11) Under the direct write-off method, a customer who doesn't pay their bills is written off with what journal entry?

A) Debit Accounts receivable and credit Uncollectible account expense.

B) Debit Uncollectible account expense and credit Cash.

C) Debit Uncollectible account expense and credit Accounts receivable.

D) Debit Lost revenue and credit Accounts receivable.

12) The following information is from the 2013 records of Armadillo Camera Shop:

Uncollectible accounts expense is determined by the direct write-off method.  Which of the following will be the amount of Uncollectible accounts expense?

A) $2,250

B) $3,450

C) $7,000

D) $2,850

13) A company has significant uncollectible receivables.  Why is the direct write-off method unacceptable?

A) Assets will be understated on the balance sheet.

B) It violates the matching principle.

C) Direct write-offs would be immaterial.

D) It is not allowed for taxes.