If a Company Uses the Allowance Method of Accounting for Bad

question 74

Multiple Choice

If a company uses the allowance method of accounting for bad debts:

• A) it uses a liability account called the Allowance for Bad Debts account.
• B) it will record bad debts only when an account is determined to be uncollected.
• C) it does not have to reduce accounts receivable when the account is written off.
• D) it will report accounts receivable in the balance sheet at their net realizable value.

---

Definitions:

Modified

Altered or changed in form, structure, or characteristics, often through human intervention or natural processes.

Phagocytic Vesicle

A membrane-bound compartment inside a cell that encloses material taken up by phagocytosis to be digested.

Secondary Lysosome

A cell organelle formed by the fusion of a primary lysosome with a phagosome, involved in the breakdown of cellular material.

Hydrolytic Enzymes

Biological catalysts that speed up the breakdown of molecules by adding water.