The Entry to Write Off an Account Under the Allowance

question 21

True/False

The entry to write off an account under the allowance method affects net income at the time of entry.

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Definitions:

Petty Cash Fund

A petty cash fund is a small amount of cash kept on hand for making immediate, low-cost expenditures, reducing the need for writing checks or using credit transactions.

Cash Short

A situation where the cash on hand is less than the expected amount or what is recorded in the books, often indicating errors or mismanagement.

Journal Entry

A record in an accounting journal that captures the financial transactions of a business, showing debits and credits for each transaction.

Petty Cash Account

A modest sum of money maintained readily available for small, urgent costs.