5. For a company using the allowance method, the collection of an account receivable that has previously been written off will have what effect on the financial statements? Assets Increase Decrease Liabilities Decrease Decrease Increase No Effect No Effect Stockholders' Equity A. B. C.No Effect D. E. No Effect Increase No Effect Decrease Decrease No Effect Decrease 6. Which of the following statements is false? Recording an accrual of revenue increases stockholders' equity If a company's accounts receivable are a material amount the company must use the allowance method of accounting for their accounts receivables. Using the allowance method of accounting for accounts receivables follows the matching concept. The issuer of a note records a receivable on their books on the date the note is issued. A. B. C. D. E. A debit memo issued by the bank reduces a company's cash balance. 7. Accrual accounting requires that bad debts resulting from the failure of credit customers to pay their bills should: A. B. C. be recognized in the period in which the account receivable proves to be uncollectible because that is the only date when the exact amount of bad debt will be knowrn. be estimated and recorded in the period in which sales are made so that expenses are matched with revenues be estimated in the period in which sales are made, because of the matching principle, but should not be recorded until the customer actually defaults