When the Allowance Method of Recognizing Bad Debt Expense Is

question 15

Multiple Choice

When the allowance method of recognizing bad debt expense is used, the entries at the time of collection of a small account previously written off would

• A) Increase net income
• B) Increase Allowance for Bad Debts
• C) Decrease net income
• D) Decrease Allowance for Bad Debts

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Definitions:

Cash Balance

The amount of cash that a company or an individual has available at any given time.

Journal Entry

An accounting record of a transaction where the total amounts in the debit and credit columns are equal.

NSF Check

A check that cannot be processed due to insufficient funds in the account of the issuer.

Internal Control

Processes and procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.