When an Account Becomes Uncollectible and Must Be Written Off

question 2

Multiple Choice

When an account becomes uncollectible and must be written off,

• A) allowance for doubtful accounts should be credited.
• B) accounts receivable should be credited.
• C) bad debts expense should be credited.
• D) sales returns and allowances should be debited.

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Definitions:

Sequential Method

A systematic approach in which tasks or procedures are performed one after another in a specific order, frequently used in manufacturing or problem-solving processes.

Reciprocal Services

Transactions between two units within an organization where each unit provides services to the other, facilitating internal cost allocation.

Sequential Method

A procedure used in cost accounting to allocate service department costs to producing departments in a specific sequence.

Support Department Costs

Costs associated with the functions that assist the operational activities of a company, including HR, IT, and maintenance services, indispensable for production but not part of the direct manufacturing process.