Katy Company Uses the Allowance Method

question 197

Multiple Choice

Katy Company uses the allowance method.Katy writes off a customer account balance when it becomes clear that the particular customer will never pay.How will this write-off affect the company's net income and accounts receivable turnover ratio?

• A)Net income and the account receivable turnover ratio will both decrease.
• B)Net income will decrease;the account receivable turnover ratio will not change.
• C)Net income will not change;the account receivable turnover ratio will decrease.
• D)Net income will not change;the account receivable turnover ratio will not change.

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Definitions:

Gaseous Biogeochemical Cycles

The circulation of chemical elements like carbon and nitrogen through the atmosphere, involving exchanges between living organisms and physical processes.

Carbon Dioxide

A gas devoid of color and smell, produced from the burning of carbon-containing compounds and the act of breathing. Naturally found in the environment, it is essential for plant photosynthesis.

Atmosphere

The layer of gases surrounding the Earth that is held in place by gravity and is composed of nitrogen, oxygen, and trace gases.

Lower Layer

Refers to the bottom or underneath sections in a stratified structure, such as atmospheric layers, soil profiles, or bodies of water.