Use the Following to Answer Questions

question 78

Multiple Choice

Use the following to answer questions
On January 1,2016,Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $31,000 and $500,respectively.During the year Kincaid reported $72,500 of credit sales.Kincaid wrote off $550 of receivables as uncollectible in 2016.Cash collections of receivables amounted to $74,550.Kincaid estimates that it will be unable to collect one percent (1%) of credit sales.
-Kincaid's entry required to recognize the uncollectible accounts expense for 2016 will

• A)increase total assets and retained earnings.
• B)decrease total assets and increase retained earnings.
• C)decrease total assets and net income.
• D)increase total assets and decrease net income.

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Definitions:

Rule 10b-5

A rule under the U.S. Securities Exchange Act of 1934 addressing fraud and misrepresentation in securities transactions.

Fraud

An intentional deception that causes harm to another.

Material Omission

The failure to disclose important information intentionally or unintentionally, which if known, could influence the decision-making of a party relying on the information.

Securities Transaction

The process of buying, selling, or trading securities, such as stocks or bonds, in financial markets.