Under the Direct Write-Off Method of Uncollectible Accounts, If a Written

question 183

Multiple Choice

Under the direct write-off method of uncollectible accounts, if a written off account is later collected, the effect on the accounting equation is

• A) an increase in assets and an increase in liabilities
• B) an increase in liabilities and a decrease in stockholders' equity (expense)
• C) a decrease in assets and an increase in stockholders' equity (expense)
• D) a decrease in assets and a decrease in stockholders' equity (expense)

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Definitions:

Predominant Purpose Test

A legal test used to determine whether a contract is primarily for the sale of goods or the provision of services under the Uniform Commercial Code.

Unconscionable

In contract law, a contract that is grossly unfair or one-sided; one that “shocks the conscience of the court.”

Acceptance

In contract law, the act of agreeing to an offer, thereby creating a binding contract.

Quasi-contract

An obligation imposed by law in the absence of an agreement to prevent unjust enrichment.