Which of the Following Is Characteristic of a Company That

question 130

Multiple Choice

Which of the following is characteristic of a company that uses the allowance method of accounting for bad debts?

• A) It does not use a contra-asset account called Allowance for Doubtful Accounts.
• B) It records bad debt expense each time an account is determined to be uncollectible.
• C) It increases its accounts receivable balance when the account is written off.
• D) It reports accounts receivable in the balance sheet at their net realizable value.

---

Definitions:

Self-Interest

An individual's personal gain or advantage, often considered as a driving force behind economic activity and decision-making.

Market System

In this economic framework, the determination of investment, manufacturing, and allocation follows the principles of supply and demand, allowing prices for goods and services to be set freely within an open pricing system.

Allocates Resources

the process of distributing available resources among various uses to achieve optimal outcomes or objectives.

Economic Freedom

The degree to which individuals and businesses can make economic decisions without government intervention.