With Respect to the Write-Off of an Uncollectible Account Receivable

question 54

Multiple Choice

With respect to the write-off of an uncollectible account receivable against the Allowance for Bad Debts account, a sound system of internal control would require:

• A)the write-off be approved by two employees.
• B)an investigation of why credit was extended to this customer in the first place.
• C)a lawsuit to be initiated to recover the uncollectible amount.
• D)the write-off to be made within six months after the date of sale.

Understand the concept of discharge by performance and how it applies to fulfilling contractual obligations.

Identify and describe various conditions (precedent, subsequent, concurrent) that can affect the performance of contractual duties.

Recognize how parties are discharged from their obligations either through performance, failure of a condition, or operation of law.

Understand the concept of tender as an offer of performance and its significance in contracts.

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Definitions:

Support Departments

Units within an organization that provide essential services to other departments or divisions but do not directly produce revenue.

Profit Center

A decentralized unit in which the manager has the responsibility and the authority to make decisions that affect both costs and revenues (and thus profits).

Budget Performance Report

A report comparing the actual financial performance with the planned or budgeted amounts, often highlighting variances for analysis.

Cost Center

A business division that incurs costs but directly does not generate revenues, its performance being measured through cost control.