Which One of the Following Is Not One of the Three

question 25

Multiple Choice

Which one of the following is not one of the three steps involved in establishing a credit policy?

• A) Establishing credit payment patterns
• B) Establishing credit standards
• C) Establishing a collection policy
• D) Establishing credit terms

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Definitions:

Bad Debts Expense

An expense account that represents accounts receivable that a company does not expect to collect.

Unadjusted Trial Balance

A listing of all the accounts and their balances from the ledger, before any adjustments, used to check the arithmetic accuracy of bookkeeping.

Aging of Receivable Method

An accounting technique used to estimate uncollectible debts by analyzing the age of accounts receivable.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of a company's accounts receivable that may ultimately not be collectible.