When the Direct Write-Off Method Is Used, the Entry to Write-Off

question 5

Multiple Choice

When the direct write-off method is used, the entry to write-off a specific account would

• A) decrease expenses and increase net income.
• B) have no affect on net income.
• C) increase the accounts receivable and increase net income.
• D) decrease the accounts receivable and decrease net income.

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Definitions:

Expected Profits

Anticipated earnings calculated based on projected revenues, costs, and market conditions.

Interest Rate

The percentage of an amount of money charged for its use over a specified period, often annually, by lenders to borrowers.

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Firm's Profits

The financial gains a firm obtains after deducting all expenses, taxes, and costs from its total revenues.