NACVA Exam CVA Topic 5 Question 79 Discussion

Actual exam question for NACVA's CVA exam

Question #: 79
Topic #: 5

[All CVA Questions]

One way is to compare the historical percentage of bad debt losses from past credit sales with the percentage current credit sales being charged to bad debt expense to see if too little or too much is currently being charged. Another approach is:

ATo compare the unearned revenue schedule allowance relative to the amount of overdue accounts

BTo compare the aged account receivable schedule allowance relative to the amount of overdue accounts

CTo compare the aged account receivable schedule allowance relative to the amount of expired accounts

DTo compare the aged account receivable schedule allowance relative to the amount of undue accounts

Show Suggested Answer

Suggested Answer: D

by Margart at Jan 28, 2024, 07:58 AM

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Aretha

1 days ago

But wouldn't comparing the aged account receivable schedule allowance give us a better indication of potential bad debt losses?

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Ozell

3 days ago

I disagree, I believe the answer is A) To compare the unearned revenue schedule allowance relative to the amount of overdue accounts.

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Aretha

5 days ago

I think the answer is B) To compare the aged account receivable schedule allowance relative to the amount of overdue accounts.

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Mari

7 days ago

I think the correct answer is B. Comparing the aged account receivable schedule allowance to the amount of overdue accounts is a good way to assess the adequacy of the allowance.

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