The Adjustment for Bad Debts Using the Percentage of Receivables

question 105

Multiple Choice

The adjustment for bad debts using the percentage of receivables ignored the debit balance in the Allowance account.This error would cause:

• A)total assets to be overstated.
• B)total liabilities to be understated.
• C)net income to be understated.
• D)None of these is correct.

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Definitions:

Homeostasis

The ability of a living system to maintain a stable internal environment despite changes in external conditions.

Nervous System

The network of nerve cells and fibers that transmits nerve impulses between parts of the body, coordinating its actions and sensory information.

Stable Environment

An environment where conditions remain relatively constant over time, allowing for the maintenance of ecosystem equilibrium.

Epithelial Tissues

Layers of cells that cover the body's surfaces, line cavities, and form glands, playing key roles in protection, secretion, and absorption.