Summers, Inc

question 6

Multiple Choice

Summers, Inc. uses the allowance method to account for bad debts. The entry to record the write-off of a customer's account balance decreases

• A)assets and owners' equity.
• B)assets and decreases liabilities.
• C)owners' equity and revenues.
• D)the accounts receivable account.

---

Definitions:

Bankruptcy Law

Bankruptcy Law governs the process through which individuals or entities unable to meet their financial obligations can seek relief from some or all of their debts.

Trustee

An individual or organization that holds or manages assets, typically on behalf of others, under the terms of a trust agreement.

Financial Obligations

Money owed by an individual or organization to another entity under terms specified in a contract.

Bankruptcy and Insolvency Act

A statute of Canada that governs bankruptcy and insolvency law, providing for the legal process by which individuals or companies unable to meet their financial obligations can seek relief.