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:

Acid

A substance that can donate a hydrogen ion (H+) and usually has a sour taste.

Base

A substance that can accept hydrogen ions (protons) or more generally, donate a pair of valence electrons.

Saponification Reaction

A chemical reaction in which fats or oils react with an alkali to produce soap and glycerol.

Animal Fats

Natural esters derived from fatty acids and glycerol, commonly found in tissues of animals.