net Accounts Receivable will be overstated.
No.
Allowance for Uncollectible Accounts
The account is considered an uncollectible account. The account must be adjusted so that the business can balance its books.
Prepaid is that amount of expense which is paid in advance and expense not occured while unearned account is that amount where amount for services received in advance but services not provided.
The general ledger journal entry for the uncollectible bad debt would be considered a loss in ledger. Debit the account named Bad Debt Expense for the amount and credit the account Accounts Receivable for the amount.
Assets (accrued revenue) is understated. Accrued taxes are understated (unaccrued revenue times tax rate) Retained earnings are understated (amount of revenue not accrued less the accrued income tax) Income statement revenue is understated Income tax expense is understated (unaccrued revenue times tax rate)
Based on experience, a company will know that a certain percentage of their outstanding accounts receivable will be uncollectible, They apply this experience via a formula to approximate the dollar amount of uncollectible ,and set up an allowance for doubtful accounts (a contra-asset account) and the debit goes to bad debt expense .The formula might be as simple as 1% of total A/R or various percentages applied to an A/R aging (50% of over 90 days old +10% of over 60 day old etc.).At the end of each period, the allowance is adjusted and re calculated accordingly, up or down with the offset to bad debt expense.
A cash interest expense is a cash amount that accrues interest. These types of expenses vary depending on the type of account and the money present in the account.
Understated DefinedUnderstated amounts indicate a reported amount is not correct and the reported amount is less than the true amount.Overstated DefinedOverstated is the opposite of understated in accounting terminology. Accountants use this term to describe an incorrect reported amount that is higher than the true amount.
amount charged to expense since the acquisition of the plant asset.
when there is certainty that the amount is no longer recoverable, despite all efforts to collect it. Generally when a debtor become bankrupt or die. or the cost of pursuing the debtor to pay the debt is more then debt it self
When an accountant says that an amount is understated, it means two things:1. The amount is not the correct amount, and2. The amount is less than the true amount. In other words, the amount is too small.To illustrate the term understated, let's assume that a company is reporting its accounts payable as $21,000. Let's also assume that the correct or true amount of accounts payable is $23,000. An accountant will say that the reported amount of $21,000 is understated by $2,000.