Which of the Following Statements Is Not Correct

question 28

Multiple Choice

Which of the following statements is not correct?

• A) The use of the direct charge-off method of recording losses from uncollectible accounts usually results in the balance in the Accounts Receivable account being overstated.
• B) The direct charge-off method of recording losses from uncollectible accounts is the method required by Federal income tax laws.
• C) The direct charge-off method of recording losses from uncollectible accounts is an application of the matching principle.
• D) When using the direct charge-off method,there is no Allowance for Doubtful Accounts account.

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Definitions:

Cycle Inventory

The portion of inventory that companies hold to facilitate smooth production and sales operations, fluctuating based on production cycle needs.

Low-Value Product

Products that have a low price point or perceived economic value to the consumer, often resulting in slim profit margins.

High Demand

A situation where the desire and need for a product or service greatly exceeds the available supply within a market.

Transportation

The movement of goods and people from one location to another using various modes such as road, rail, air, and sea.