When a Company Uses the Allowance Method of Accounting for Uncollectible

question 145

Multiple Choice

When a company uses the allowance method of accounting for uncollectible receivables, the entry to reinstate a previously written off account would include a

• A) credit to Bad Debt Expense
• B) debit to Bad Debt Expense
• C) debit to Allowance for Doubtful Accounts
• D) credit to Allowance for Doubtful Accounts

Understand the significance of considering inventory losses and "shrinkage" in inventory accounting.

Recognize the role of modern technology in the adoption of inventory systems.

Understand the treatment of inventory purchases and costs under different inventory systems.

Identify the legal and accounting treatment of inventory ownership and consignment.

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Definitions:

General Journal

A ledger in which all transactions are initially recorded, dated, and described.

Transposition Error

A common accounting mistake where figures are mistakenly reordered, leading to inaccurate entries and discrepancies in financial records.

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account columns to ensure their accuracy.

Journalized

The process of recording transactions in the accounting journals as part of the accounting cycle.