Most Tests of Accounts Receivable and the Allowance for Uncollectible

question 64

Multiple Choice

Most tests of accounts receivable and the allowance for uncollectible accounts are based on the:

• A) results of analytical procedures.
• B) results of confirmations.
• C) aged trial balance.
• D) general ledger balance of each account.

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Definitions:

Revolving Credit Agreement

A formal, binding agreement with a bank as to the maximum amount a firm can borrow during a period of time. Interest is paid on the amount borrowed and a commitment fee is paid on the unused balance.

Promissory Note

A lending agreement in which the borrower promises to pay principal and interest in accordance with specific terms.

Commercial Banks

Banks that provide a wide range of services to businesses and consumers including loans, checking accounts, and savings options.

Commercial Bank Loans

are loans that businesses and individuals can obtain from a commercial bank to finance various needs, such as business expansion or personal expenses.