A Company with Significant Amounts of Accounts Receivable Experiences Uncollectible

question 220

Multiple Choice

A company with significant amounts of accounts receivable experiences uncollectible accounts from time to time.If the company uses the direct write-off method,the effect of writing off an uncollectible receivable will be ________.

• A) a reduction in net income
• B) negligible on net income
• C) an increase in total assets
• D) a generation of positive cash flow

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Definitions:

Brand-Attached

The emotional connection consumers develop with a specific brand, strongly influencing their purchasing decisions.

Economies of Scale

The price benefits that firms receive by virtue of their size of operations, with each unit's production cost declining as the scale of operations expands.

Economic Inefficiency

Situations where resources are not optimally allocated, resulting in lost potential output or welfare.

Price Wars

A competitive exchange among rival companies where each company lowers the price of its products in an attempt to undercut the competition, potentially harming profit margins.