When Evaluating the Collectability of Accounts Receivable

question 67

Multiple Choice

When evaluating the collectability of accounts receivable:

• A)the Uncollectible-Account Expense is a contra account.
• B)the Allowance for Uncollectible Accounts is an operating expense in the selling,general and administrative category.
• C)the allowance method uses estimates developed from the company's collection experience.
• D)the direct write-off method uses the Allowance for Uncollectible Accounts to record bad debts.

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Definitions:

Profit

The financial gain obtained when the revenue generated from business activities exceeds the expenses, costs, and taxes involved in sustaining the activity.

Commodity

A fundamental merchandise in commerce that can be swapped with other merchandise of a similar nature.

Maximise

To increase to the greatest possible amount or degree within a given set of constraints, often used in the context of profit or utility maximization.

Input

A resource or component used in the production process to produce goods and services.