The Direct Write-Off Method of Recognizing Uncollectible Accounts Expense

question 75

Multiple Choice

The direct write-off method of recognizing uncollectible accounts expense:

• A)Is acceptable only when most of the company's sales are on credit.
• B)Records uncollectible accounts expense when individual accounts receivable are determined to be worthless.
• C)Records uncollectible accounts expense when customers exceed their credit limits.
• D)Uses a valuation account to record specific customer accounts deemed uncollectible.

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Definitions:

Equivalent Units

Equivalent units are a concept in cost accounting used to represent the amount of work done on incomplete units, expressed in terms of fully completed units.

Work in Process Inventory

Goods that are in the production process but are not yet completed.

Direct Materials

Materials in their unprocessed or natural state that can be directly linked and assigned to the end product during the production phase.

Work in Process

Inventory that is in the production process and has not yet been completed or turned into final goods.