What Is the Most Common Reason for the Failure of Small

question 102

Multiple Choice

What is the most common reason for the failure of small business?

• A) Poor marketing
• B) Managerial incompetence
• C) Loss of interest in the business
• D) Fraud
• E) Poor production capabilities

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Definitions:

Direct Write-off Method

A method of accounting for bad debts that involves charging the amount of an uncollectible account directly to the expense account when it is deemed non-recoverable.

Uncollectible Receivables

Debts owed to a company that are considered to be uncollectable and are written off as a loss.

Debit Balance

Occurs when the total of debits in an account exceeds the total of credits, which can be typical for accounts like expenses, assets, and losses.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of a company's accounts receivable that may not be collectible.