The Net Method of Recording Accounts Receivable Is Rarely Used

question 196

Multiple Choice

The net method of recording accounts receivable is rarely used because it

• A)is less theoretically correct than the gross method.
• B)requires an "Allowance for Sales Discounts" to be reported on the statement of financial
• Position.
• C)has a different effect on the statement of financial position and income statement.
• D)requires more bookkeeping for the additional adjusting entries after the discount period
• Has passed.

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Definitions:

Crossed The Chasm

A concept describing the transition of a technology product from early adoption to widespread acceptance and use in the mainstream market.

Bottom-up Analysis

An approach that starts with specific details and flows upwards to identify broader trends and patterns.

Top-down Analysis

An approach that starts with the broader economy or market before analyzing specific sectors or companies.

Predicted Total Sales

An estimation of the total amount of sales revenue a business expects to earn over a specified future period.