Under the Direct Write-Off Method, the Entry to Write Off

question 9

Multiple Choice

Under the direct write-off method, the entry to write off an uncollectible account of $1,250 includes:

• A) a debit to Accounts Receivable for $1,250
• B) a credit to Bad Debt Expense for $1,250
• C) a debit to Bad Debt Expense for $1,250
• D) a debit to Allowance for Uncollectible Accounts for $1,250

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Definitions:

Price Controls

Government-imposed limits on the prices charged for goods and services in a market, aiming to maintain affordability and prevent inflation.

Consumer Surplus

The difference between the maximum price consumers are willing to pay for a good or service and the actual price they pay, representing the benefit obtained by consumers in the transaction.

Market Price

The current price at which an asset or service can be bought or sold; determined by supply and demand.

Sugar Quotas

Government-imposed limits on the quantity of sugar that can be imported or produced domestically, often used to protect domestic production and control prices.