The Writing Off of a Debtor's Account as a Bad

question 63

Multiple Choice

The writing off of a debtor's account as a bad debt when no allowance for doubtful debts has been made will see:

• A)a decrease in the asset accounts receivable, decrease in equity.
• B)no effect.
• C)a decrease in the asset accounts receivable, increase in the liability provision for doubtful debts.
• D)a decrease in the asset bank, decrease in the asset accounts receivable.

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Definitions:

Note Receivable

A written promise or obligation for the payment of a certain sum of money to the holder on demand or at a specified future date.

Interest Receivable

The revenue from interest that has been earned but not yet received, recorded as an asset on the balance sheet.

Discounts Own Note

A transaction where a business discounts or reduces the value of its own promissory note, often to raise short-term capital.

Notes Payable

Written promises to pay a specified sum of money, typically to a lender, by a certain date.