The Allowance Method Overcomes Shortcomings of the Direct Write-Off Method

question 31

Multiple Choice

The allowance method overcomes shortcomings of the direct write-off method because it

• A)recognizes the loss from uncollectible accounts in the period in which the sale occurs and the firm recognizes revenue.
• B)reduces the opportunity to manage earnings each period by deciding when particular customers' accounts become uncollectible.
• C)reflects the amount a firm expects to collect in cash from the accounts receivable on the balance sheet.
• D)all of the above.
• E)none of the above.

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Definitions:

Neuron

A specialized cell transmitting nerve impulses; a nerve cell.

Dendrites

The branched extensions of a neuron that receive signals from other neurons.

Cell Body

The part of the neuron that keeps it alive and determines whether or not it will fire.

Neurons

Cells within the nervous system that transmit information to other nerve cells, muscle, or gland cells.