Answer the following statements true (T) or false (F)

Question

1) When using the direct method to account for uncollectibles, an allowance account is used.
2) When using the allowance method to account for uncollectibles, the balance sheet approaches require two steps in determining bad debts expense.
3) Businesses must estimate the amount of bad debts expense at the end of the accounting period only when using the balance sheet approaches.
4) The interest period extends from the original date of the note to the maturity date.
5) The maturity value of a note is the sum of the principal minus interest due at maturity.
6) Interest is generally stated as a monthly rate on notes receivable.

Answer 1

1) FALSE
2) TRUE
3) FALSE - Businesses must estimate the amount of bad debts expense at the end of the accounting
period when using the income statement or balance sheet approaches.
4) TRUE
5) FALSE
6) FALSE