Which of the Following Transactions Is Represented by the Diagram

question 36

Multiple Choice

Which of the following transactions is represented by the diagram below?

• A)A junkyard holds weekly sales where it sells its entire inventory.
• B)A shoe store sells products to consumers.
• C)A stay-at-home mom creates furniture for doll houses.When one piece is finished,she sells it on Amazon.com.
• D)Netflix sells movies to consumers through its online downloading service.

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Definitions:

Direct Write-Off Method

The method of accounting for uncollectible accounts that recognizes the expense only when accounts are judged to be worthless.

Uncollectible Accounts

Funds that a company is unable to collect from its debtors, leading to recognition as a loss.

Direct Write-Off Method

A bookkeeping approach where bad debts are immediately expensed against earnings when they are considered irrecoverable.

Uncollectible Receivables

Receivables from sales or loans that the company is unable to collect and therefore considers as a loss.