The Direct-Write Off Method for Uncollectible Accounts Receivable

question 87

Multiple Choice

The direct-write off method for uncollectible accounts receivable:

• A)may understate net income and total assets in the year of sale.
• B)may overstate net income and total assets in the year of sale.
• C)may understate net income and overstate total assets in the year of sale.
• D)may overstate net income and understate total assets in the year of sale.

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Definitions:

Statute of Frauds

A legal concept that requires certain types of contracts to be executed in writing and signed by all parties involved, to be enforceable.

Oral Contract

An oral contract is an agreement between two or more parties that is spoken and not written down, yet is legally binding.

Convey the Deed

The act of transferring title of real property from one person or entity to another through a legal document.

Parol Evidence Rule

A rule in contract law that prevents parties from presenting extrinsic evidence of prior or contemporaneous agreements to alter or contradict the terms of a written contract.