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:

Exchange Rates

The price at which one currency can be exchanged for another currency, which can fluctuate based on economic factors.

Journal Entries

Records of financial transactions in the accounting system, showing the accounts affected and whether they are debited or credited, to maintain the integrity of financial statements.

Euros

The official currency of 19 out of the 27 European Union countries, known as the Eurozone.