The Collection of an Account That Had Been Previously Written

question 20

Multiple Choice

The collection of an account that had been previously written off under the allowance method for uncollectible accounts

• A) increases net income in the period of collection.
• B) involves a credit to Bad Debts Expense.
• C) will usually require two journal entries.
• D) is recorded by debiting Cash and crediting Bad Debts Expense.

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Definitions:

Actual Results

The real, measured outcomes of business activities, often compared against budgeted or forecasted figures.

Flexible Budget

An adjustable budget that changes or scales according to the level of activity or output, making it more useful for performance evaluation.

Total Variable Cost

The total of all costs that vary directly with the level of production or sales volume, such as raw materials and direct labor.

Activity Declines

Situations where the level of activity or productivity in a business decreases over a certain period.