Which Statement Is Not True in Relation to Bad Debts

question 63

Multiple Choice

Which statement is not true in relation to bad debts recovered?

• A) The accounts receivable should be re-established to maintain a complete history of the customer's activity and restore their credit rating.
• B) The entry to reinstate the accounts receivable is debit accounts receivable and credit bad debts recovered.
• C) The entry made following reinstatement of the account receivable to record the recovery is debit bad debts recovered and credit accounts receivable.
• D) The recovery is recorded by effectively reversing the entry originally made to write off the receivable.

---

Definitions:

Consolidated Cash

The total cash and cash equivalents held by a parent company and its subsidiaries, presented as a single figure on consolidated financial statements.

Common Stock

A type of equity ownership in a corporation, representing a claim on a portion of the company’s profits and the right to vote on matters affecting the company.

Acquisition

The process of obtaining control of another company by purchase or exchange of stock.

Fair Values

The estimated market value of an asset or liability, based on current prices in an open and competitive market.