1/15
the portion of the debt that is not collected is written off to the impairment loss on trade receivables
the entire amount is written off to the allowance for impairment loss of trade
receivables
the portion of the debt that is not collected is written off to the allowance
for impairment of trade receivables
the entire amount is written off to the impairment loss on trade receivables
2/15
Recording the allowance for impairment of trade receivables is in accordance with the prudence theory that states that ______________.
assets are not overstated
assets are not understated
income is not overstated
income is not understated
3/15
The allowance for impairment of trade receivables is shown in the ______________.
trading portion of the statement of financial performance
profit and loss portion of the statement of financial performance
current assets section of the statement of financial position
current liabilities section of the statement of financial position
4/15
Impairment loss on trade receivables is shown in the ______________.
trading portion of the Statement of Financial Performance
expenses portion of the Statement of Financial Performance
current assets section of the Statement of Financial Position
current liabilities section of the Statement of Financial Position
5/15
Trade receivables is presented as net trade receivables which is ______________.
trade receivables plus impairment loss on trade receivables
trade receivables plus allowance for impairment of trade receivables
trade receivables less allowance for impairment of trade receivables
trade receivables less impairment loss on trade receivables
6/15
When the balance in the allowance for impairment of trade receivables increases at the end of a financial period compared to the beginning of the period, there is ______________.
no effect on profit for the period
a decrease in profit for the period
a decrease in gross profit for the period and profit for the period
an increase in profit for the period
7/15
Why does a business give trade discounts?
to increase cash payment
to encourage customers to make prompt payment
to reduce debtor balance
to increase sales
8/15
The effect of writing-off a trade receivable balance in the current period where an allowance for impairment of trade receivable had been made in the prior accounting period, ______________ in the current accounting period.
increases profit
decreases profit
increases profit
9/15
Trade receivables: $20,000
It was estimated that 5% of trade receivables may be uncollectible.
$800
$200
$1,000
$1,800
10/15
Trade receivables: $20,000
It was estimated that 5% of trade receivables may be uncollectible.
What would be the amount that would be shown as an expense in the statement of financial performance?
$800
$200
$1,000
$1,800
11/15
Trade receivables: $20,000
It was estimated that 5% of trade receivables may be uncollectible.
The name of the expense shown in the statement of financial performance is _____________________
Reversal of impairment loss on trade receivables
12/15
Trade receivables: $20,000
It was estimated that 5% of trade receivables may be uncollectible.
On 30 June 2022, it was discovered trade receivable Tan who owed $600 was declared bankrupt. ABC Trading has not yet written off this amount owing. The journal entry to write off the amount owing by Tan is:
13/15
Trade receivables: $20,000
It was estimated that 5% of trade receivables may be uncollectible.
$800
$1,000
$970
$770
14/15
What are the journal entries necessary for decreasing the allowance for impairment of trade receivables by $100?
15/15
The accounting theory that supports the creation of the allowance for impairment of trade receivables is the __________ theory.
Accounting entity
Materiality
