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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Frederick

1 months ago

Option B is the answer, no doubt. Comparing the allowance to overdue accounts is the way to go - it's like comparing apples to apples, you know?

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Deeanna

1 months ago

B is the way to go. Comparing the allowance to overdue accounts is a smart move - that's where the real risk lies.

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Sommer

9 days ago

User 2: Definitely, it helps to assess the risk accurately.

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Ollie

17 days ago

User 1: I agree, comparing the allowance to overdue accounts is crucial.

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Hassie

1 months ago

I'm going with B as well. Comparing the allowance to overdue accounts makes the most sense in terms of assessing the bad debt provision.

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Arlette

1 months ago

B sounds like the best option to me. Comparing the allowance to the overdue accounts is a practical way to evaluate if the allowance is sufficient.

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Annita

1 days ago

User 3: I agree, comparing the aged account receivable schedule allowance to the amount of overdue accounts is a good indicator of the sufficiency of the allowance.

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Marylin

4 days ago

User 2: Yeah, that seems like a logical way to assess if the allowance is adequate.

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Lenna

7 days ago

User 1: I think B is the best option too. It makes sense to compare the allowance to the overdue accounts.

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Aretha

2 months 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

2 months 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

2 months 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

2 months 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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