The Account Allowance for Doubtful Accounts Is Necessary Because

question 8

Multiple Choice

The account Allowance for Doubtful Accounts is necessary because

• A)when recording bad debts expense, it is not possible to know which specific accounts will default.
• B)uncollectible accounts that are written off must be accumulated in a separate account.
• C)a liability results when a credit sale is made.
• D)management needs to accumulate all the credit losses over the years.

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Definitions:

Monitoring

The process of systematically tracking and evaluating performance, conditions, or progress over time.

Factory Overhead

All indirect costs related to the production process, such as utilities, maintenance, and supervision, not directly tied to specific units produced.

Factory Burden

Another term for manufacturing overhead, encompassing all indirect costs involved in operating a factory, excluding direct materials and labor costs.

Surplus

The amount by which a company's income exceeds its spending, or in a broader sense, an excess of assets over liabilities.