All of the Statements Concerning Bad and Doubtful Debts Are

question 33

Multiple Choice

All of the statements concerning bad and doubtful debts are correct, except which of the following?

• A)The account, doubtful debts expense, is a contra asset account deducted from accounts receivable in the statement of financial position.
• B)Bad debts written off is an expense that relates to situations where there is a high degree of certainty that the amount owed will never be paid, e.g., the bankruptcy of the debtor.
• C)Doubtful debts relate to amounts unlikely to be received from accounts receivable but where the business is still trying to collect the sum owed.
• D)Doubtful debts can be estimated by applying a given percentage to credit sales.

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Definitions:

Money

A medium of exchange, measure of value, or means of payment, typically in the form of coins and banknotes, used to facilitate transactions.

Uniform Commercial Code

A comprehensive set of laws that govern commercial transactions in the United States, intended to standardize legislations across states and simplify interstate commerce.

Negotiable Instruments

Financial documents representing a promise to pay a specific amount of money to the bearer on demand or at a future date, such as checks, drafts, and promissory notes.

Checks

Written, dated, and signed instruments that direct a bank to pay a specific sum of money to the bearer or to a specified person.