Using the Direct Write-Off Method, the Effect on the Accounting

question 1

Multiple Choice

Using the direct write-off method, the effect on the accounting equation of writing off a debtor's account as a bad debt is:

• A) decrease in the asset bank, decrease in the asset debtors.
• B) no effect.
• C) decrease in the asset debtors, increase in the liability provision for doubtful debts.
• D) decrease in the asset debtors, decrease in equity.

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Definitions:

Compound Interest

The process where interest is calculated not just on the original principal but also on the interest that has accumulated over previous periods.

Compound Interest

This involves calculating interest by adding the initial amount of money deposited or borrowed to the interest that has accumulated over time.

Compound Interest

Accumulated interest on a loan or deposit determined by including both the initial principal amount and the interest accumulated over preceding periods.

Arithmetic Operations

Basic mathematical operations that include addition, subtraction, multiplication, and division.