ACCT 051(BSA 32A1) AUDITING & ASSURANCE: Concepts & Application 1

Pre Finals Quiz 1

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Question 1
The net realizable value of accounts receivable is presented on the face of SFP. The related allowance for doubtful accounts is
disclosed in the notes to the financial statements as deduction from accounts receivable general ledger balance.

Response: False

Question 2
When the balance of accounts receivable in the general ledger includes a custer's account with credit balances for advance payment
for future deliveries, this should be reclassified to another asset account Advances from Customers.

Response: False
Question 3
When the customer's account is deemed uncollectible, allowance is provided in the books of accounts through journal entry. When
an account is written off, accounts receivable is credited, and when finally recovered, accounts receivable is again credited for the
cash received per PAS.

Response: True

Question 4
To record the recovery of account previously written off, the accountant simply reverses the "write off entry and records the
collection in usual manner.

Response: True

Question 5
Bad debts Expense is credited when account previously written off is finally recovered under the allowance method. Allowance for
Bad Debts is a contra-asset account with a debit normal balance.

Response: True