When the Allowance Method of Recognizing Bad Debts Expense Is

question 216

Multiple Choice

When the allowance method of recognizing bad debts expense is used the entry to recognize that expense

• A) increases net income.
• B) decreases current assets.
• C) has no effect on current assets.
• D) has no effect on net income.

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Definitions:

Cash Short

A situation where the amount of cash in a register or petty cash drawer is less than what the records indicate should be present.

Over

Typically refers to situations where actual costs or quantities exceed estimates or planned values in a budget, project, or manufacturing.

Cash Controls

Procedures and policies that are implemented to manage and safeguard a company's cash transactions.

Theft

The act of stealing; specifically, the unlawful taking of another's property with the intent to permanently deprive the owner of it.