Which of the Following Is a True Statement About a Company

question 66

Multiple Choice

Which of the following is a true statement about a company that uses the allowance method?

• A)Uncollectible Accounts Expense is recorded when a receivable is written off.
• B)Uncollectible accounts are not recorded until the amount becomes significant.
• C)The net realizable value of its accounts receivable is shown on the balance sheet.
• D)None of these answer choices are correct.

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Definitions:

Fixed Asset

A Fixed Asset is a long-term tangible piece of property that a company owns and uses in its operations to generate income, and not expected to be consumed or converted into cash within a year.

Straight-Line Depreciation

A plan to allocate the price of a concrete asset in consistent yearly fractions over its lifespan.

Salvage Value

The forecasted selling price for an asset once it reaches the end of its operational life.

Depreciation Expense

The allocated expense of a tangible asset over its useful life, representing the asset's reduction in value due to use and wear and tear.