Under the Allowance Method

question 54

Multiple Choice

Under the allowance method:

• A) the company records the uncollectible-account expense when the customer does not pay.
• B) the allowance for uncollectible accounts is a contra account to gross revenue.
• C) the allowance for uncollectible accounts will normally have a debit balance.
• D) the company sets up an allowance for uncollectible accounts to estimate the amount of the receivables the company does not expect to collect.

---

Definitions:

Structural Unemployment

A form of unemployment caused by shifts in the economy, such as technological changes or global competition, that create a mismatch between the skills workers have and the skills needed by employers.

Frictional Unemployment

Short-term joblessness experienced by individuals transitioning between jobs, careers, or locations, often considered a natural and healthy part of a dynamic economy.

Minimum-Wage Laws

Legislation that sets the lowest hourly wage rate that employers can legally pay their employees.

Minimum Wage

The lowest legal salary that employers can pay workers, set by government law or policy.