When an Account Is Written Off Using the Allowance Method

question 45

Multiple Choice

When an account is written off using the allowance method, the

• A)cash realizable value of accounts receivable will increase.
• B)cash realizable value of accounts receivable will decrease.
• C)allowance account will increase.
• D)cash realizable value of accounts receivable will stay the same.

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Definitions:

Profitability

A measure of the efficiency and financial performance of a business, indicating its ability to generate income relative to revenue, assets, or equity.

Significant Influence

The power to participate in the financial and operating policy decisions of an investee but not control those policies.

Voting Shares

Shares that give the shareholder the right to vote on company matters at shareholder meetings.

ASPE

Accounting Standards for Private Enterprises, a set of accounting principles for private companies in Canada.