On October 29 of the Current Year, a Company Concluded

question 100

Multiple Choice

On October 29 of the current year, a company concluded that a customer's $4,400 account receivable was uncollectible and that the account should be written off. What effect will this write-off have on this company's net income and total assets assuming the allowance method is used to account for bad debts?

• A) Decrease in net income; no effect on total assets.
• B) No effect on net income; no effect on total assets.
• C) Decrease in net income; decrease in total assets.
• D) Increase in net income; no effect on total assets.
• E) No effect on net income; decrease in total assets.

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Definitions:

Inefficiency

The failure to use resources in the most cost-effective manner, often leading to wasted potential output.

Wheat

A cereal grain cultivated worldwide and a staple food in many parts of the world, used for making flour, bread, and other food products.

Wine

An alcoholic beverage made from fermented grapes or other fruits, with variations in taste and strength depending on the type of grape and production process.

Production Possibility Frontier

An image projecting the ultimate production capacities for a duo of items, rooted in a given assortment of inputs including resources and extra aspects.