Under the Direct Write-Off Method of Uncollectible Accounts, If a Written

question 183

Multiple Choice

Under the direct write-off method of uncollectible accounts, if a written off account is later collected, the effect on the accounting equation is

• A) an increase in assets and an increase in liabilities
• B) an increase in liabilities and a decrease in stockholders' equity (expense)
• C) a decrease in assets and an increase in stockholders' equity (expense)
• D) a decrease in assets and a decrease in stockholders' equity (expense)

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Definitions:

Net Income

Net income is the total profit a company generates after subtracting all its expenses, taxes, and losses from its total revenue.

Operating Activities

Activities that constitute the primary or main activities of an entity, including the production, sales, and delivery of the company’s product as well as collecting payment from its customers.

Sale Proceeds

Sale proceeds refer to the total amount received from the sale of goods or assets before any deductions are made.

Equipment

Fixed assets used in the operations of a business to generate income, not intended for sale.