When All of the Cash for an Account Previously Written

question 68

Multiple Choice

When all of the cash for an account previously written off under the direct write-off method is unexpectedly collected, the correct entry is

• A) debit Bad Debt Expense and credit Accounts Receivable.
• B) debit Accounts Receivable and credit Bad Debt Expense.
• C) debit Cash and credit Accounts Receivable.
• D) dependent on the period in which the cash was collected.

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Definitions:

Lot-For-Lot

An inventory policy where the order quantity is set to match the exact demand for the coming period, minimizing holding costs.

Setup Cost

Setup cost is the expense incurred to prepare equipment, machines, or systems for a manufacturing run or production operation.

Inventory Holding Cost

The total cost associated with storing unsold goods, including warehousing, depreciation, insurance, and opportunity costs.

EOQ Lot-Sizing

An inventory management approach that determines the optimal order quantity to minimize total inventory costs, including ordering and holding costs.