Which of the Following Statements Is True Regarding the Two

question 124

Multiple Choice

Which of the following statements is true regarding the two allowance methods used to account for bad debts?

• A)The percentage of net credit sales approach takes into account the existing balance in the Allowance for Doubtful Accounts account.
• B)The direct write-off method takes into account the existing balance in the Allowance for Doubtful Accounts account.
• C)The percentage of accounts receivable approach takes into account the existing balance in the Allowance for Doubtful Accounts account.
• D)The direct write-off method does a better job of matching revenues and expenses.

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Definitions:

Denominated

Used to describe the currency in which a financial transaction or investment is stated or valued.

Eurobonds

International bonds issued in a currency not native to the country where it is issued, allowing companies to raise capital in a foreign currency.

Bearer Form

A method of issuing securities whereby the certificate does not record the owner's name, making possession of the physical certificate equivalent to ownership of the security.

Income Taxes

Taxes imposed by the government directly on income, both earned (salaries, wages, commissions) and unearned (interest, dividends).