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:

Remarry

The act of marrying again after being divorced or widowed.

Polygamy

A marital practice in which a person has more than one spouse simultaneously, not widely legal or socially accepted in many cultures.

Same-sex Cohabiting Relationships

Partnerships between individuals of the same sex who live together in a domestic setting without being legally married.

Cohabiting

The practice of cohabiting and engaging in intimate relations without formal marriage.