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:

Federal Revenue

The income received by the federal government from various sources like taxes, fees, and investments.

Personal Income

The total amount of income received by an individual from all sources before any taxes or deductions.

FICA Taxes

Taxes collected under the Federal Insurance Contributions Act that fund Social Security and Medicare programs.

Regressive

Pertaining to a tax system in which the tax rate decreases as the taxable amount increases, commonly considered less fair because it imposes a heavier burden relative to income on those with less.