69 7950 10 Accountants define and understand RECEIVABLES To

$6,9 $7,950 10. Accountant\'s define and understand RECEIVABLES: To include accounts receivables, notes receivables and other receivables. A) B To be claims from individuals and companies that are expected to be collected in cash To be shown on the balance sheet valued at its cash net realizable value. C) D) A and B only E) All of the above represent characteristics of receivables. 11. Accounts receivable balances are required to be reflected at ne t realizable value as stimating bad debit is of the balance sheet date. Use of the allowance method for e the preferred method because it: A) is required by GAAP. B) it provi C) A and B D) None of the above ides for better matching of revenue with expenses. l nocorded:

Solution

Q10. Answer is E. All of the above represent characteristics of receivables. Explanation: Receivables means the amount due to be received which includes, Accounts receivable, Notes receivable ad other receivables. These are the claims of individual and other parties to be paid by them as also these are paid in cash. These are shown in Balance Sheet at net realizable value. Q11. Answer is C. A and B. Allowance method of recording the bad debt expenses is suitable which adhere to the matching principle of Accounting. The expense of bad debt is booked in the same year in which revenue recognized. Also, it is as per GAAP.