Under the Direct Write-Off Method, When a Previously Written-Off Account

question 66

Multiple Choice

Under the direct write-off method, when a previously written-off account is recovered in the same accounting period, which of the following entries is required to reinstate the account?

• A) debit Accounts Receivable and credit Bad Debt Expense
• B) debit Accounts Receivable and credit Cash
• C) debit Cash and credit Bad Debt Expense
• D) debit Cash and credit Accounts Receivable

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Definitions:

Consumption

The portion of income spent on goods and services rather than saved.

Billion

A number equivalent to one thousand million (1,000,000,000) or, in some number systems, a million million (1,000,000,000,000).

Saving

The portion of income not spent on current consumption but set aside for future use, often in a deposit account or as an investment.

Disposable Income

The sum of funds a family can use for expenditures and savings once income taxes are deducted.