Grabbe Enterprises Uses the Allowance Method to Account for Uncollectible

question 128

Multiple Choice

Grabbe Enterprises uses the allowance method to account for uncollectible receivables.When an uncollectible account is written off,________.

• A)the Bad Debt Expense account is debited
• B)no entry is required because bad debt expense is estimated at the end of the accounting period
• C)the write off has no effect on net income
• D)the Allowance for Bad Debts account is credited

---

Definitions:

Leakage

In economics, money or income that exits the economy through various channels without returning directly as spending or investment.

Circular Flow

A model in economics that depicts how money and goods move through the economy in a loop between households and firms.

Injection

In economics, a method of adding funds or capital to an economy by government spending or exports; in medicine, it's the act of administering a liquid substance directly into the body through a needle and syringe.

Circular Flow

an economic model that depicts how money moves through the economy, from households to businesses and back, via the markets for goods and services and for factors of production.