Using the Direct Method, Cash Received from Customers Is Calculated

question 66

Multiple Choice

Using the direct method, cash received from customers is calculated as sales:

• A)Plus an increase in allowance for uncollectible accounts.
• B)Minus an increase in allowance for uncollectible accounts.
• C)Plus an increase in accounts receivable.
• D)Plus a decrease in accounts receivable.

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Definitions:

Medicare Tax

A federal tax that funds Medicare, a health care program for individuals who are 65 years and older or meet other specific criteria, deducted from employee wages with an employer match.

Social Security Tax Rate

The rate at which income is taxed to fund the Social Security program, typically shared between employees and employers.

Medicare Tax Rate

The percentage of an individual's wages that is withheld or paid toward Medicare, a U.S. government health insurance program.

Net Pay

The amount of an employee's income after all deductions like taxes, insurance, and retirement contributions have been subtracted.