An Entry Reinstating an Account That Was Previously Written Off

question 90

Multiple Choice

An entry reinstating an account that was previously written off under the allowance method would show a(n) :

• A) decrease to Bad Debts Expense and a decrease to Accounts Receivable.
• B) increase to Accounts Receivable and a decrease to Allowance for Doubtful Accounts.
• C) increase to Accounts Receivable and an increase to Allowance for Doubtful Accounts.
• D) decrease to Bad Debts Expense and an increase to Allowance for Doubtful Accounts.

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Definitions:

AVC

Average Variable Cost, the total variable costs (labor, materials, etc.) divided by the quantity of output produced, illustrating how variable costs change with the level of output.

Shutdown Point

The point where a firm's revenue is not enough to cover its variable costs, leading to a decision to cease production temporarily.

Short Run

In economics, a period during which at least one input, like factory size or machinery, is fixed and cannot be changed, as opposed to the long run where all factors can be varied.

Long Run

A period in economic analysis where all inputs can be adjusted and there are no fixed factors of production.