When the Collectability of an Amount That Has Been Recorded

question 49

Multiple Choice

When the collectability of an amount that has been recorded as revenue becomes uncertain,the appropriate accounting treatment is to:

• A) recognise as an expense the amount in respect of which recovery has ceased to be probable.
• B) calculate the discounted present value of the amount expected to be received and adjust the recorded revenue accordingly.
• C) adjust the amount of revenue originally recognised.
• D) make no adjustment as the amount and timing of the uncollectible amount is uncertain.

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Definitions:

Lignite

A soft brownish coal showing traces of plant structure, intermediate between bituminous coal and peat.

Sulfuric Acid

A highly corrosive strong mineral acid with molecular formula H2SO4, widely used in industry.

Runoff

Water from rain, snowmelt, or other sources that flows over the land surface and is not absorbed into the ground, potentially carrying pollutants to bodies of water.

Underground Mine

A type of mine where natural resources, like minerals or ores, are extracted from beneath the Earth's surface through tunnels or shafts.