Proper Accounting Requires That an Account Receivable Must Be Written

question 95

Multiple Choice

Proper accounting requires that an account receivable must be written off by the client when

• A)the client company concludes that an amount is no longer collectible.
• B)the customer files for bankruptcy.
• C)a collection agency cannot inspire the customer to pay the debt.
• D)the account is at least six months old.

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Definitions:

Cost of Goods Sold

An expense recorded on the income statement that reflects the total cost of producing or purchasing the goods that a company has sold during a specific period.

Cost of Goods Sold

Represents the total cost of all goods that were sold over a specific period, including the costs associated with production or purchase.

Gross Profit

The difference between revenue and the cost of goods sold (COGS), indicating the efficiency of a company in using its labor and supplies.

Net Sales

Revenue from sales transactions after deducting returns, allowances for damaged or missing goods, and any discounts offered.