When a Company Is Using the Direct Write-Off Method,and an Account

question 192

Multiple Choice

When a company is using the direct write-off method,and an account is written off,the journal entry consists of a ________.

• A) debit to Accounts Receivable and a credit to Cash
• B) credit to Accounts Receivable and a debit to Bad Debts Expense
• C) debit to the Allowance for Bad Debts and a credit to Accounts Receivable
• D) credit to Accounts Receivable and a debit to Interest Expense

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Definitions:

Markup

The amount added to the cost price of goods to cover overhead and profit; calculated as a percentage of the cost.

Net Sales

The amount of sales generated by a company after deducting returns, allowances for damaged or missing goods, and discounts.

Beginning Inventory

The value of goods available for sale at the start of an accounting period.

Market Value

Market value is the current price at which an asset or service can be bought or sold.