A Company with Significant Amounts of Accounts Receivable, Experiences Uncollectible

question 104

Multiple Choice

A company with significant amounts of accounts receivable, experiences uncollectible accounts from time to time. If the company uses the direct write-off method, the effect of writing off of an uncollectible receivable will be a(n) :

• A)reduction in net income.
• B)nil on net income.
• C)increase in total assets.
• D)generation of positive cash flow.

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Definitions:

Stable Rules

Regulations or principles that remain constant and unchanged over time.

Environmental Context

The set of physical, social, and economic conditions surrounding and affecting the existence or development of an entity or subject.

Political Pluralism

The acknowledgment and acceptance of diversity in political beliefs and ideologies within a society.

International Economic Factors

Encompass global influences that impact the economic conditions of countries, such as trade policies, exchange rates, and international investment flows.