Richard LLC Accounts for Possible Bad Debts Using the Allowance

question 63

Multiple Choice

Richard LLC accounts for possible bad debts using the allowance method.When an actual bad debt occurs,what effect does it have on the accounting equation?

• A)Increases assets and increases stockholders' equity.
• B)Decreases assets and decreases stockholders' equity.
• C)Decreases assets and decreases liabilities.
• D)No effect on the accounting equation.

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Definitions:

Cohesiveness

Refers to the degree of camaraderie within a group.

Productivity

The measure of efficiency in converting inputs into useful outputs, often evaluated in terms of the amount of output produced per unit of input.

Reward Allocation Norms

Guidelines or principles that dictate how rewards such as recognition, salary increases, or promotions are distributed within an organization.

Social Loafing

The tendency of individuals to exert less effort on a task when working in a group than when working alone.