In Determining the Adequacy of the Allowance for Uncollectible Accounts

question 76

Multiple Choice

In determining the adequacy of the allowance for uncollectible accounts, the least reliance should be placed upon which of the following?

• A)The credit manager's opinion.
• B)An aging schedule of past due accounts.
• C)Subsequent year collections of amounts in accounts receivable at the balance sheet date.
• D)Ratios calculated showing the past relationship of the valuation allowance to net credit sales.

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Definitions:

Time Of Payment

The specific date or schedule agreed upon for payment to be made in a transaction.

Bearer Instrument

A type of negotiable financial instrument that entails payment to whoever holds the document, without requiring the transfer to be recorded, distinguishing it from other securities which are registered to specific owners.

Payable

Refers to an amount of money that is owed by a person or company to a creditor, typically categorized in financial statements as current liabilities.

Possesses

The act of having physical control or ownership of something, indicating a legal relationship between a person and the object being possessed.