A Company Uses the Direct Write-Off Method to Account for Uncollectible

question 45

Multiple Choice

A company uses the direct write-off method to account for uncollectible receivables.Which of the following is included in the entry to write off an uncollectible account?

• A) A credit to the Allowance for uncollectible accounts
• B) A credit to the customer's Account receivable
• C) A debit to Allowance for uncollectible-accounts
• D) No entry is made to write off uncollectible accounts.

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Definitions:

Investment Tax Credit

a tax incentive that allows businesses to deduct a certain percentage of the amount invested in assets or projects from their tax liability.

Investment Goods

Long-term assets purchased for the purpose of generating income, growth, and/or value appreciation.

Interest Rate

The percentage charged on borrowed money, or earned through savings and investments, reflecting the cost of borrowing or the benefit of saving.

Short Run

A period in economic analysis where at least one factor of production is fixed, leading to limited adjustments in production or operation.