Which of the Following Statements Is True Regarding the Two

question 73

Multiple Choice

Which of the following statements is true regarding the two allowance procedures used to estimate bad debts?

• A)The percentage of net credit sales method takes into account the existing balance in the Allowance for Doubtful Accounts account.
• B)The direct write-off method takes into account the existing balance in the Allowance for Doubtful Accounts account.
• C)The aging of accounts receivable method takes into account the existing balance in the Allowance for Doubtful Accounts account.
• D)The direct write-off method does a better job of matching revenues and expenses.

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Definitions:

Increase

An upward movement in quantity, value, or some measure of performance.

Revenues

Revenues refer to the income that a business generates from its normal business operations, typically from the sale of goods and services to customers.

Owner's Capital

The amount of equity a business owner has invested in the company, reflecting the difference between the company's assets and liabilities.

Credit Balance

A condition where the sum of credits in an account exceeds the sum of debits, often signaling a net liability or income.