Under the Direct Write-Off Method of Accounting for Uncollectible Accounts

question 42

Multiple Choice

Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited

• A) at the end of each accounting period.
• B) when a credit sale is past due.
• C) whenever a pre-determined amount of credit sales have been made.
• D) when an account is determined to be worthless.

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Definitions:

Tax Paid

The amount of money paid to the government as a result of taxable activities, such as income earned or goods sold.

Ending Fixed Assets

The value of a company's physical assets, such as property, buildings, and machinery, at the end of an accounting period.

Cash Flow From Assets

The total of cash flow to bondholders and cash flow to shareholders, consisting of operating cash flow, capital spending, and additions to net working capital.

EBIT

Earnings Before Interest and Taxes, a measure of a company's profitability based purely on operational and business activities without considering interest and tax expenses.