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:

Machinery

Equipment or devices designed for a specific purpose, often used in manufacturing or industrial processes.

Investing Activities

Transactions and events that relate to the investment of the company’s cash, including acquisitions and disposals of long-term assets and other investments not included in cash equivalents.

Cash Flows

The net amount of cash being transferred into and out of a business.

Operating Activities

The principal revenue-producing activities of the entity and other activities that are not investing or financing activities.