On November 2, 2014, Quaint General Store Concluded That a Customer's

question 73

Multiple Choice

On November 2, 2014, Quaint General Store concluded that a customer's $400 account receivable was uncollectible and that the account should be written off.What effect will this write­off have on Quaint's 2014 net income and balance sheet totals assuming the allowance 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:

Full Employment

Full employment refers to a situation in the economy where all available labor resources are being used in the most efficient way possible, virtually eliminating involuntary unemployment.

Inefficient Outcome

A situation where resources are not allocated in the most valuable or productive way, often resulting from market failures or externalities.

Production Possibilities Frontier

A graphical representation that shows the combination of two goods that can be produced using all resources efficiently.

Inefficient Levels

Situations where resources are not being used in the best possible way from an economic perspective, leading to potential waste or losses.