If the Direct Write-Off Method Is Used for Uncollectible Receivables

question 47

Multiple Choice

If the direct write-off method is used for uncollectible receivables, what account is debited when writing off a customer's account?

• A)accounts receivable
• B)allowance for doubtful accounts
• C)bad-debt expense
• D)sales returns and allowances

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Definitions:

Finished Goods Inventory

Finished goods inventory consists of items that have completed the manufacturing process and are ready to be sold to customers, representing a final stage in product inventory.

Weighted-Average Method

An inventory costing method that assigns a weighted average cost to each unit of inventory, based on the cost of goods available for sale and the number of units available.

Equivalent Units

Equivalent units are a concept in cost accounting used to assign costs to partially completed goods, converting them into the amount of finished goods units they represent.

Direct Materials Cost

The expenditure on raw materials that are directly involved in the production of a good or service.