Polo, Inc Uses the Direct Write-Off Method of Accounting for Bad

question 62

Multiple Choice

Polo, Inc. uses the direct write-off method of accounting for bad debts. During July, Torey's account was written off as uncollectible. The write-off of Torey's account

• A) increases both the current and quick ratios.
• B) decreases the current ratio and has no effect on the quick ratio.
• C) decreases both the current and quick ratios.
• D) increases the current ratio and has no effect on the quick ratio.

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Definitions:

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The price at which the option holder has the right to buy or sell the underlying security, synonymous with strike price.

Stock Price

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Stock Option

A financial derivative that gives the buyer the right, but not the obligation, to buy or sell a stock at an agreed-upon price within a certain period.

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