A System of Handling Cash Receipts by Mail Whereby Customers

question 123

Multiple Choice

A system of handling cash receipts by mail whereby customers send checks in payment of their accounts directly to a post office box controlled by a bank is a(n) :

• A)imprest system.
• B)lock-box system.
• C)phishing system.
• D)online banking system.

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Definitions:

Allowance for Doubtful Accounts

An estimation of the amount of accounts receivable that may not be collected, which is used as a contra asset to adjust the net value of accounts receivable.

Direct Write-off Method

An accounting approach where uncollectable debts are directly written off against income at the time they are deemed non-recoverable.

Percentage of Sales Method

A financial forecasting model that bases future sales, expenses, and other financial elements as a percentage of sales revenue.

Adjusting Entries

Journal entries made at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.