Under the Allowance Method, to Record the Receipt of Cash

question 131

Multiple Choice

Under the allowance method, to record the receipt of cash after an account has previously being written off, you would first:

• A)debit Cash and credit the customer's account.
• B)reinstate the customer's account.
• C)debit Allowance for Doubtful Accounts.
• D)debit Bad Debt Expense.

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Definitions:

Conditional Sale Agreement

A contract in which the sale is contingent upon certain conditions, typically used in real estate and high-value purchases.

Cash Price

The amount of money required to purchase an item or service outright without financing.

Compounded Quarterly

Refers to the process of calculating interest on an investment or loan where the interest is added to the principal amount four times a year.

Interest

Money paid at a particular rate for the use of borrowed funds or for delaying the repayment of a debt.