Which of the Following Statements Concerning the Estimation of Bad

question 80

Multiple Choice

Which of the following statements concerning the estimation of bad debt expense by using a percentage of credit sales is incorrect?

• A) Produces the same results, as an aging of accounts receivable.
• B) Causes an adjustment to the allowance account without regard to the balance in that account immediately prior to the adjustment.
• C) Is based primarily on the matching principle.
• D) Emphasizes the income statement.
• E) Only incidentally measures accounts receivable at net realizable value.

Understand the principles of accrual accounting and the adjustment process.

Identify and calculate interest expense and interest payable for notes payable.

Accurately record salaries and wages expenses, including adjustments for payroll periods extending beyond the fiscal year end.

Recognize the enhancing qualities and constraints of useful financial information.

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Definitions:

Beliefs

Convictions or acceptances that something exists or is true, especially without proof.

Practices

Repeated or habitual actions, methods, or operations in a particular field or discipline.

Direct Statements

Clear and straightforward expressions that communicate an idea assertively and without ambiguity.

Motivational Factor

An element or circumstance that stimulates an individual’s enthusiasm, energy, or desire to undertake specific actions or persevere in a task.