Which of the Following Is Not an Accurate Description of the Allowance

question 83

Multiple Choice

Which of the following is not an accurate description of the Allowance for Doubtful Accounts?

• A)The account is a contra account.
• B)The account is a liability.
• C)The amount of the Allowance for Doubtful Accounts decreases the net realizable value of a company's receivables.
• D)The account is increased by an estimate of uncollectible accounts expense.

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Definitions:

Shortage

A situation in which the demand for a good or service exceeds its supply in a market.

Price Floor

A minimum price set by the government or a regulatory body, below which a particular good or service cannot legally be sold.

Surplus

An excess quantity, especially referring to the situation where supply exceeds demand in a market, often leading to a decrease in prices.

Binding Minimum Wage

A minimum wage rate that is set above the equilibrium wage in the labor market, causing potential unemployment by forcing employers to pay more than the market rate for labor.