When an Account Becomes Uncollectible and Must Be Written Off

question 59

Multiple Choice

When an account becomes uncollectible and must be written off,

• A) Allowance for Doubtful Accounts should be credited.
• B) Accounts Receivable should be credited.
• C) Bad Debts Expense should be credited.
• D) Sales should be debited.

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Definitions:

Wages and Salaries

Wages and Salaries refer to the regular compensation paid to employees for their labor or services in executing their job responsibilities.

Note Payable

A financial obligation or loan evidenced by a promissory note, which requires the borrower to pay back the amount borrowed plus interest.

Incremental Borrowing Rate

The Incremental Borrowing Rate is the interest rate a company would have to pay if it borrows funds, used in lease accounting to measure lease liabilities.

Equipment

Tangible property owned by a business that is used in its operations to generate income.