Assume a Price Ceiling Is Imposed at the Current Equilibrium

question 104

Multiple Choice

Assume a price ceiling is imposed at the current equilibrium price in the market for wheat.If the supply of wheat then decreases as a result of bad weather,then:

• A) a surplus of wheat will be created.
• B) a shortage of wheat will be created.
• C) the quantity of wheat traded remains the same.
• D) the quantity of wheat supplied will increase.

---

Definitions:

Allowance Method

An accounting technique used to estimate uncollectable accounts receivable within a company's financial statements.

Bad Debt Expense

An accounting term representing the amount of revenue considered uncollectible from credit sales.

Allowance for Doubtful Accounts

A contra-asset account that reduces the total receivables balance to reflect the amount that is expected to be uncollectible.

Allowance for Doubtful Accounts

The allowance for doubtful accounts is an accounting technique to estimate the amount of receivables that are expected not to be collected, acting as a contra account to accounts receivable.