The Allowance for Uncollectible Accounts Is Necessary Because

question 56

Multiple Choice

The allowance for uncollectible accounts is necessary because

• A)a liability results when a credit sale is made.
• B)when recording uncollectible accounts expense,it is not possible to predict specifically which accounts will not be collected.
• C)management should know how many credit losses have been sustained over the years.
• D)uncollected accounts that are written off must be accumulated in a separate account.

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Definitions:

Employee Discounts

Reductions in price offered to employees of a company as a part of their employment benefits, encouraging them to purchase products or services from the employer.

FIFO Retail Inventory Method

An inventory costing method that assumes items are sold in the order they were purchased or produced, first-in, first-out, applied specifically to retail inventories.

Cost-to-retail Percentage

Cost-to-retail percentage is a ratio used in retail to convert the ending inventory at retail prices back to a cost basis for financial reporting.