Under the Allowance Method, When a Year-End Adjustment Is Made

question 113

Multiple Choice

Under the allowance method, when a year-end adjustment is made for estimated uncollectible accounts

• A) Liabilities decrease.
• B) Net Income is unchanged.
• C) Total Assets are unchanged.
• D) Total Assets decrease.

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Definitions:

Treasury Stock

Stocks that the issuing company originally sold and then bought back, lowering the total number of shares available for trade on the market.

Fair Market

The price that an asset would sell for on the open market, under all conditions requisite to a fair sale.

Stock Dividend

A form of dividend payment made by a company to its shareholders in the form of additional shares rather than cash.

Market Price

The current market value at which a service or good can be traded.