If the Direct Write-Off Method of Accounting for Uncollectible Receivables

question 90

Multiple Choice

If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible?

• A) Uncollectible Accounts Receivable
• B) Accounts Receivable
• C) Allowance for Doubtful Accounts
• D) Bad Debt Expense

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Definitions:

Excess Reserves

The capital reserves held by a bank or financial institution in excess of what is required by regulators, creditors, or internal controls.

Money Supply

The total amount of monetary assets available in an economy at a specific time, including currency and various types of bank deposits.

Open Market Purchases

Actions by a central bank to buy securities in the open market to increase the money supply and lower interest rates, aiming to stimulate economic activity.

Reserve Requirement

The minimum amount of reserves a bank is mandated to hold by central banking authorities, akin to the reserve ratio.