On December 1, Anson's Drug Store Concluded That a Customer's

question 70

Multiple Choice

On December 1, Anson's Drug Store concluded that a customer's $325 account receivable was uncollected and that the account should be written off. What effect will this write-off have on the company's net income and balance sheet totals assuming the direct write-off method is used to account for bad debts?

• A)decrease in net income; decrease in total assets
• B)increase in net income; no effect on total assets
• C)no effect on net income; decrease in total assets
• D)no effect on net income; no effect on total assets

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Definitions:

Continuous Budgeting

A financial planning approach that involves continuously updating a budget by adding a new period as the current period is completed.

Revising Budgets

The process of reviewing and adjusting planned budgets based on actual performance and changing circumstances.

Rolling Budget

A continuously updated budget that adds a new budget period (e.g., month, quarter) as the current period concludes, thereby extending the overall budget horizon.

Merchandising Companies

Businesses that purchase goods and resell them at a higher price without modifying the original products.