When an Account Is Written Off Using the Allowance Method

question 31

Multiple Choice

When an account is written off using the allowance method for uncollectible accounts, the

• A) carrying amount of total accounts receivable will increase.
• B) net accounts receivable will decrease.
• C) allowance account will increase.
• D) net accounts receivable will stay the same.

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Definitions:

State Agency

A government body at the state level responsible for overseeing and implementing specific regulations and policies within its jurisdiction.

Equal Credit Opportunity Act

A U.S. law aimed at ensuring all consumers have an equal chance to obtain credit, prohibiting discrimination based on race, color, religion, national origin, sex, marital status, age, or because someone receives public assistance.

Consumer Credit

A form of credit extended to consumers to finance the purchase of goods, services, or for personal use, subject to repayment terms.

Commercial Credit

A type of financing that allows businesses to obtain goods or services with payment to be made at a later date.