The Collection of an Account That Had Been Previously Written

question 185

Multiple Choice

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles

• A)will increase income in the period it is collected.
• B)will decrease income in the period it is collected.
• C)requires a correcting entry for the period in which the account was written off.
• D)does not affect income in the period it is collected.

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Definitions:

Present Value

The current value of a future amount of money or stream of cash flows, given a specified rate of return.

Payback Period

The time it takes for an investment or project to generate cash flow or profits sufficient to cover the initial outlay or cost.

Scrap Value

The estimated value that an asset will realize upon its sale at the end of its useful life.

Net Operating Income

The income generated from a company's everyday business operations, excluding taxes and interest.