If the Provision for Bad Debt Is Increased,the Accounting Adjustment

question 3

Multiple Choice

If the provision for bad debt is increased,the accounting adjustment will be:

• A) Dr: Bad debt expense Cr: Provision for bad debts
• B) Dr: Provision for bad debts Cr: Bad debt expense
• C) Dr: Bad debt expense Cr: Trade receivables
• D) Dr: Trade receivables

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Definitions:

Price Elasticity

An indicator of the variation in the amount of a product desired by consumers as its cost fluctuates.

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually pay.

Complementary Goods

Products or services that are typically consumed together, where the demand for one increases the demand for the other.

Inelastic

Describing demand that changes little with price fluctuations; consumers’ buying habits are not significantly affected by price changes.