If You Default on Your Automobile Loan

question 80

Multiple Choice

If you default on your automobile loan:

• A) an advance notice to you is required before your car is repossessed.
• B) no advance notice is required before repossession.
• C) the federal consumer credit laws give you protection from your car being repossessed.
• D) you don't have to pay the full balance due on your automobile loan.
• E) you pay fifty percent of the balance due on your automobile loan.

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Definitions:

Uncollectible Accounts

Uncollectible accounts are debts from customers that a company has attempted to collect but determined they cannot be recovered and are thus written off as a loss.

Expense Recognition Principle

An accounting principle that dictates the conditions under which an expense is recognized and reported in the financial statements.

Percent of Receivables Method

An accounting technique used to estimate the amount of a company's accounts receivable that will not be collected, based on a percentage of the total accounts receivable.

Perpetual Inventory System

This is an accounting method that continuously updates inventory records for each sale or purchase of inventory.