Selling Accounts Receivable Typically

question 181

Multiple Choice

Selling accounts receivable typically:

• A) decreases assets and increases revenues.
• B) decreases assets and increases expenses.
• C) increases assets and increases revenues.
• D) has no effect on assets and decreases expenses.

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Definitions:

Uncollectible Accounts

Receivables that are recognized as losses after all attempts to collect the money owed have failed, indicating debts unlikely to be recovered.

Allowance for Doubtful Accounts

A contra-asset account that reduces the total receivables amount to reflect what is expected to be collectible.

Bad Debts Expense

An expense account reflecting the cost of accounts receivable that a company does not expect to collect.

Uncollectible Accounts

Refers to receivables that are deemed unlikely to be collected, indicating potential losses for a company.