Which Statement Is Correct About Recording an Allowance for Doubtful

question 5

Multiple Choice

Which statement is correct about recording an allowance for doubtful accounts?

• A)Accounts receivable are not adjusted for known uncollectible amounts.
• B)Net accounts receivable is recalculated when there are changes recorded in the Allowance for Doubtful Accounts contra account.
• C)Comparability is the reason an allowance for doubtful accounts is needed.
• D)An allowance for doubtful accounts does not require estimates or judgments.

---

Definitions:

Heuristics

Simple, efficient rules or strategies, often subconscious, used to make decisions and solve problems quickly, but not always accurately.

Availability Heuristic

An intellectual quick route based on the readily accessible examples in a person's thoughts during the appraisal of a specific subject, idea, technique, or judgment.

Lottery Tickets

Pre-purchased tickets for a lottery, a form of gambling where winners are selected by drawing of lots from among those who have paid money to participate.

Daily Drawings

A practice or exercise involving creating a drawing every day, often used to enhance artistic skills or for personal expression.