Which Statement Is Not Correct About Estimating the Allowance for Doubtful

question 59

Multiple Choice

Which statement is not correct about estimating the allowance for doubtful accounts under the balance sheet approach?

• A)Accounts receivable are stated at their net realizable value.
• B)Accounts receivable are stated at their fair value.
• C)Bad debt expense is based on the accounts receivable balance.
• D)Bad debt expense is based on an aging of the accounts receivable.

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Definitions:

Administrative Agencies

Governmental bodies responsible for the oversight and implementation of specific regulations and laws.

Federal Level

Pertains to the national government operations or regulations, as opposed to state or local levels.

State Level

Pertaining to governmental authority and matters that are handled by individual state governments, as opposed to the federal government.

Uniform Law

A law created to account for the variability of laws among states; serves to standardize the otherwise different interstate laws. Also called model law.