Equilibrium Output Is Reduced by an Increase in

question 24

Multiple Choice

Equilibrium output is reduced by an increase in

• A)planned investment.
• B)taxes.
• C)government spending.
• D)net exports.

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Definitions:

Allowance for Doubtful Accounts

A contra-asset account used to estimate and offset the amount of receivables that may not be collected.

Uncollectible Accounts

Accounts receivable that a company does not expect to collect due to customer defaults.

Bad Debt Expense

The estimated amount of credit sales that are not expected to be collected, representing potential loss to the company.

Allowance Method

An accounting technique used to account for bad debts, where estimated uncollectible accounts are expensed, adjusting the accounts receivable balance.