When Using the Allowance Method for Accounting for Bad Debts,trade

question 77

Multiple Choice

When using the allowance method for accounting for bad debts,trade receivables is reported on the statement of financial position at the expected net realizable value.When a particular receivable from a customer ultimately is determined to be uncollectible,the recording of this event will do which of the following?

• A)decrease the net realizable value of the trade receivables.
• B)have an effect that is not determinable from the information given.
• C)increase the net realizable value of the trade receivables.
• D)have no effect on the net realizable value of the trade receivables.

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Definitions:

Operating Activities

The day-to-day actions that are involved in running a business, typically involving production, sales, and delivery of a company's product or service.

Dividends Per Share

The amount of dividend a company pays out to each shareholder for each share they own, typically expressed on an annual basis.

P/E

Price-to-Earnings Ratio, a valuation metric comparing the current share price of a company to its per-share earnings.

Market Price

The current price at which an asset or service can be bought or sold on the open market.