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:

Inverse Seniority

A system used during layoffs where employees with the least amount of seniority are laid off first, as opposed to those with more seniority.

Grievance Procedure

A formal process through which employees can submit complaints or disputes for resolution, usually outlined in a collective bargaining agreement.

Formal Grievance

A structured complaint process followed by employees to formally raise issues about their employment conditions or treatment by employers.

Grievance Procedure

A formalized process through which employees can file complaints or disputes for management to resolve, usually outlined in their contract or employee handbook.