Under the Allowance Method for Uncollectible Accounts, When a Year-End

question 9

Multiple Choice

Under the allowance method for uncollectible accounts, when a year-end adjustment is made for estimated uncollectible accounts,

• A)total assets decrease.
• B)total assets are unchanged.
• C)net profit is unchanged.
• D)liabilities decrease.

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Definitions:

Cost of Goods Sold

Cost of Goods Sold (COGS) represents the direct costs attributable to the production of the goods sold in a company.

Finished Goods Inventory

The inventory of goods that are completed and ready for sale.

Goods Available

The total inventory that a company has ready for sale at the beginning of an accounting period, including both produced and acquired goods.

Raw Materials

Basic materials used in the production process to create goods and services.