SRM Company Uses the Allowance Method to Record Its Bad

question 52

Multiple Choice

SRM Company uses the allowance method to record its bad debt expense.When the account of a particular customer is deemed to be uncollectible and is written off,which of the following will be included in the journal entry?

• A)debit to bad debt expense.
• B)credit to bad debt expense.
• C)debit to allowance for doubtful accounts.
• D)debit to trade receivables.

---

Definitions:

Fixed Costs

Costs that remain constant regardless of the amount of goods produced or sold, like lease payments or employee wages.

Net Income

The amount of profit left after all operating expenses, taxes, and costs have been subtracted from total revenue.

Variable Costs

Expenses that fluctuate with the level of output or sales, such as raw materials and direct labor.

Fixed Costs

Costs that do not vary with the level of production or sales, remaining constant regardless of business activity levels.