When a Company Has an Immaterial Amount of Bad Debts,it

question 38

Multiple Choice

When a company has an immaterial amount of bad debts,it may choose to account for bad debt expense using

• A)the direct writeoff method.
• B)the percentage receivables method.
• C)the percentage of credit sales method.
• D)aging of accounts receivable method.

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Definitions:

Charitable Contribution

Financial or material donations given to a charitable organization, often eligible for tax deductions.

C Corporation

A type of business entity that is taxed separately from its owners, and can have an unlimited number of shareholders.

Subchapter S Status

A tax designation for small corporations that meet specific IRS requirements, allowing income to be taxed at the shareholder level rather than at the corporate level.

Subchapter S Corporation

A type of corporation created through an IRS tax election to pass corporate income, losses, deductions, and credits through to shareholders for federal tax purposes.