Alma Company Uses the Allowance Method of Accounting for Bad

question 22

Multiple Choice

Alma Company uses the allowance method of accounting for bad debts. Alma:

• A)is violating the matching principle.
• B)will record bad debt expense only when an account is determined to be uncollectible.
• C)will not sell to customers on account anymore.
• D)will report accounts receivable in the balance sheet at their net realizable value.

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Definitions:

Accounts Payable

The amount of money that a company owes to its suppliers or vendors for goods and services received but not yet paid for.

Internal Audit

A department within an organization tasked with evaluating and improving the effectiveness of risk management, control, and governance processes.

Approved Vendor List

A list of suppliers that a company has vetted and approved for purchasing specific goods or services.

Bona Fide Claim

A claim that is made in good faith without deception or fraud.