At the End of the Year,Smith Company Has the Following

question 29

Multiple Choice

At the end of the year,Smith Company has the following information available: The company uses the percent-of-sales method to estimate uncollectible accounts and has not prepared the year-end adjusting entry for Uncollectible-Account Expense.In the prior year,uncollectible accounts were estimated at 1% of credit sales.What action should Smith Company take in regards to uncollectible accounts at the end of the current year?

• A)increase the percentage in the percent-of-sales method
• B)reexamine credit policies,especially the extension of credit
• C)change to the direct write-off method
• D)A and B

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Definitions:

Deception

The act of misleading or tricking someone into believing something that is not true.

Police

Law enforcement officers tasked with maintaining public order, preventing, and detecting crime.

Supreme Court

The highest federal court in the United States, with ultimate appellate jurisdiction over all federal and state court cases that involve a point of federal law.

Reasonableness

A standard of rational behavior, decisions, or actions, based on fairness, legality, and morality in a given context.