Two Methods of Accounting for Uncollectible Accounts Are the

question 23

Multiple Choice

Two methods of accounting for uncollectible accounts are the

• A) direct write-off method and the allowance method
• B) allowance method and the accrual method
• C) allowance method and the net realizable method
• D) direct write-off method and the accrual method

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Definitions:

Contract Rate

It is the interest rate stated in a contract, such as a loan or lease agreement.

Non-interest-bearing Notes

Debt instruments that do not accrue interest over time, thus repaid at their face value.

Incremental Borrowing Rate

The interest rate a lessee would have to pay to borrow over a similar term the funds necessary to purchase or lease an asset.