A Company Uses the Direct Write-Off Method to Account for Bad

question 114

Multiple Choice

A company uses the direct write-off method to account for bad debts. What are the effects on the accounting equation of the entry to record the write-off of a customer's account balance?

• A)Assets and liabilities decrease
• B)Assets and Stockholders' equity decrease
• C)Stockholders' equity and liabilities decrease
• D)Assets increase and Stockholders' equity decrease

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Definitions:

Machinery

Machines collectively, often those in a particular sector or activity, functioning to perform or facilitate various tasks.

Mitochondria

Membrane-bound organelles found in the cytoplasm of eukaryotic cells, vital for energy production through cellular respiration.

Cell Walls

Rigid or semi-rigid structures surrounding the cell membrane of some cells, providing structural support and protection.

Capsules

Structures that enclose certain organisms or parts of organisms, often for protection, such as bacterial capsules which help evade immune responses.