If the Allowance Method Is Used,how Do the Two Entries

question 76

Multiple Choice

If the allowance method is used,how do the two entries recorded in connection with the recovery of an uncollectible account affect the elements of the financial statements? (Hint: Consider the effect of both entries taken together.)

• A)No effect on total assets or stockholders' equity
• B)Increase stockholders' equity
• C)Decrease total assets
• D)Increase total assets and stockholders' equity

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Definitions:

Profit/Loss

Financial metrics indicating the net earnings or deficits incurred by an entity over a particular period, calculated as the difference between revenues and expenses.

Reportable Segment's Equity

The portion of equity attributable to business segments that must be disclosed separately in financial statements according to regulatory requirements.

Reconciliations

The process of ensuring that two sets of records (usually the balances of two accounts) are in agreement, typically used in accounting to check the accuracy of financial records.

Listed Entities

Companies whose stocks are traded on a public stock exchange, making their shares available for purchase by the general public.