When Using the Allowance Method,after a Company Has Previously Written

question 191

Multiple Choice

When using the allowance method,after a company has previously written off an account,________.

• A) the company continues to send monthly statements to the customers whose accounts have been written off
• B) the company cannot collect from these customers because their accounts have been written off
• C) when a customer pays on an account that has been written off, the company needs to reverse the write-off to the Allowance for Bad Debts account and then record the receipt of cash
• D) the company does not need to reestablish the receivable account

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Definitions:

Snap Judgments

Quick decisions or assessments made instinctively without thorough analysis.

Cognitive Dissonance Theory

The theory that suggests that people experience discomfort or distress when their beliefs, attitudes, or behaviors are inconsistent with each other, leading to efforts to reduce the dissonance.

Attribution Theory

A theory focused on how people interpret and understand cause and effect relationships, and how this relates to their thinking and behavior.

Reward Theory

A theory suggesting that people are motivated by rewards, whether tangible or intangible, and that these rewards encourage specific behaviors.