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:

Antitrust Law

Legislation aimed at preventing anti-competitive practices, monopolies, and fostering fair competition in the market.

Product Price

The financial cost at which a good or service is sold to consumers in the market.

Deregulation

The removal of most or even all of the government regulation and laws designed to supervise an industry. Sometimes undertaken to combat regulatory capture.

Industrial Regulation

Government policies aimed at regulating the operations of industries to prevent unfair practices and ensure competition.