Learning Objective 4-6
1) Which financial statement shows Bad debts expense?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) both the Income statement and the Balance sheet
2) Which financial statement shows the Allowance for uncollectible accounts?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) both the Income statement and the Balance sheet
3) The adjusting entry for bad debts expense affects __________.
A) the Income statement
B) the Balance sheet
C) the Statement of cash flows
D) both the Income statement and the Balance sheet
4) What is the effect of the adjusting entry for bad debts expense on the Statement of cash flows?
A) no effect
B) a decrease in Cash from operating activities
C) an increase in Cash from operating activities
D) a decrease in Cash from financing activities
5) What is the effect of the adjusting entry for bad debts expense on the Balance sheet?
A) an increase in Total shareholders’ equity
B) an increase in Total assets
C) a decrease in Total liabilities
D) a decrease in Total assets
6) What is the effect of the adjusting entry for bad debts expense on the Income statement?
A) a decrease in Total shareholders’ equity
B) an increase in Total assets
C) a decrease in Retained earnings
D) a decrease in Net income
7) What is the effect of the adjusting entry for bad debts expense on the Statement of changes in shareholders’ equity?
A) a decrease in Total shareholders’ equity
B) an increase in Retained earnings
C) a decrease in Contributed capital
D) an increase in Net income
8) Bad debts expense decreases total assets.
9) Bad debts expense decreases net income.
10) The adjusting entry to record bad debts expense using the allowance method usually decreases total assets.