A Debit Balance in the Allowance for Doubtful Accounts

question 13

Multiple Choice

A debit balance in the Allowance for Doubtful Accounts

• A) is the normal balance for that account.
• B) indicates that actual bad debt write-offs have been less than what was estimated.
• C) cannot occur if the percentage of receivables method of estimating bad debts is used.
• D) indicates that actual bad debt write-offs have exceeded previous provisions for bad debts.

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Definitions:

Budgeted Costs

Estimated expenses planned for a specific period, used for financial planning and monitoring.

Investment Center Managers

Managers responsible for a business unit that directly impacts both revenue and costs, and therefore, the unit's profitability.

Investment Center Assets

Resources and assets managed within a business segment or division that is responsible for its own revenues, expenses, and investments, allowing for performance measurement.

Service Department Expenses

Costs incurred by the departments that support the production or operation departments but do not directly contribute to the production of goods.