The Entry to Write Off an Account Under the Allowance

question 65

Multiple Choice

The entry to write off an account under the allowance method for estimating uncollectible accounts:

• A) reduces total assets.
• B) reduces net income.
• C) has no effect on total assets or net income.
• D) increases net income.

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Definitions:

New Equity

The issuance of additional shares of stock by a company to investors, typically to raise capital for business expansion or operational needs.

Board of Directors

The board of directors is a group of individuals elected by shareholders to oversee the management and governance of a corporation.

Issue Dividends

The process by which a company distributes a portion of its earnings to its shareholders.

Dividend Irrelevance Theory

A theory suggesting that the dividend policy of a company is irrelevant to its market value, focusing instead on its earnings and investment policies.