If an Account Is Collected After Having Been Previously Written

question 116

Multiple Choice

If an account is collected after having been previously written off,

• A) the allowance account should be debited.
• B) only the control account needs to be credited.
• C) both statement of earnings and balance sheet accounts will be affected.
• D) there will be both a debit and a credit to trade accounts receivable.

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Definitions:

Interest Payments

Payments made to lenders or creditors as compensation for borrowing money, typically calculated as a percentage of the principal amount.

Face Amount

The amount specified on the face of a bond and the amount for which it will sell if the market rate of interest equals the contract rate.

Market Rate

The prevailing interest rate or cost of borrowing expressed as a percentage, available in the financial markets.

Economic Conditions

Refers to the state of a country's economy at a certain time, including factors like inflation, unemployment, and GDP growth.