All of the Following Are True for a Company That

question 68

Multiple Choice

All of the following are true for a company that uses the allowance method of accounting for bad debts, EXCEPT:

• A)It uses a contra-asset account called the allowance for doubtful accounts.
• B)It records bad debt expense each time an account is determined to be uncollectible.
• C)It reduces its accounts receivable balance when the account is written off.
• D)It reports accounts receivable in the balance sheet at their net realizable value.

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Definitions:

Sliding Clutch

Actuated by a shift yoke, used to engage a gear on a shaft. Also known as a dog clutch.

NPV

Net Present Value; a method used in capital budgeting to assess the profitability of a project or investment by calculating the difference between the present value of cash inflows and outflows.

CCA Rate

Stands for Capital Cost Allowance rate, which is a tax deduction in Canada that represents a business's investment in certain assets depreciating over time.

Tax Rate

The Tax Rate is the percentage at which an individual or corporation is taxed by the government on its income.