Which of the Following Are the Two Methods of Accounting

question 159

Multiple Choice

Which of the following are the two methods of accounting for uncollectible receivables?

• A) The direct write-off method and the liability method
• B) The asset method and the sales method
• C) The allowance method and the liability method
• D) The allowance method and the direct write-off method

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Definitions:

Common Equity

The portion of a company's equity that is held by common shareholders, represented by common stock.

Net Income

The profit a company generates after all expenses, taxes, and costs have been subtracted from total revenue.

Taxes

Compulsory financial charges imposed by a government on individuals, entities, or transactions to fund public expenditures.

Basic Earning Power

An indicator of a company's profitability from operations, expressed as EBIT (Earnings Before Interest and Taxes) divided by total assets.