Susan Puts $125 into an Account and One Year Later

question 181

Multiple Choice

Susan puts $125 into an account and one year later has $135;what was the interest rate?

• A)5 percent
• B)7 percent
• C)8 percent
• D)10 percent

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Definitions:

Allowance for Doubtful Accounts

A contra-asset account representing estimated uncollectible accounts receivable due to the customer's inability to pay.

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Direct Write-off

A method for recognizing bad debt expense when a specific account receivable is determined to be uncollectible, directly reducing accounts receivable and recognizing the expense.

Bad Debt Expense

An accounting expense recognized for receivables that are no longer considered collectible, impacting both the balance sheet and income statement.