Which Statement Is True

question 314

Multiple Choice

Which statement is true?

• A)Open market operations are seldom conducted any more.
• B)The basic way the Fed controls the money supply is by manipulating the discount rate.
• C)During periods of severe recession,the Fed tries to push up interest rates.
• D)During periods of severe inflation,the Fed tries to push up interest rates.

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Definitions:

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.

Bad Debt Expense

An expense reported on the income statement, representing the estimated amount of credit sales that are not expected to be collected due to customer default.

Uncollectible Receivables

Refers to money owed to a company that it is unable to collect from its debtors, often considered as a bad debt expense.

Allowance Method

An accounting technique used to estimate and account for bad debts, where companies anticipate some accounts receivable will be uncollectible.