The Three Activities That Explain the Cash Inflows and Outflows

question 28

True/False

The three activities that explain the cash inflows and outflows of a business are the operating, selling, and financing activities.

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Definitions:

Bad Debts Expense

A provision in accounting for accounts receivable that are not expected to be collected, recognizing them as an expense.

Allowance for Doubtful Accounts

A contra-asset account that represents the amount of accounts receivable a company does not expect to collect.

Uncollectible Accounts

Accounts receivable that are deemed to be uncollectible, leading to them being written off as a bad debt expense.

Aging

The process of categorizing accounts receivable based on the length of time an invoice has been outstanding.