One Might Infer from a Debit Balance in Allowance for Doubtful

question 97

Multiple Choice

One might infer from a debit balance in Allowance for Doubtful Accounts that

• A)a posting error has been made.
• B)more accounts have been written off than had been estimated.
• C)the direct method is being used.
• D)Bad Debt Expense has been overestimated.

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Definitions:

Accounts Receivable to Net Sales

A ratio that measures the amount of money owed to a company by its customers relative to the net sales.

Balance Sheet

A document detailing a firm's assets, liabilities, and owners' equity at a particular moment.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, revealing profit or loss.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenue.