When a Bad Debt Is Written Off and Subsequently Collected

question 59

Multiple Choice

When a bad debt is written off and subsequently collected in full:

• A) The bad debt expense for the period of collection is reduced.
• B) The allowance for doubtful accounts is reduced.
• C) The net realizable value of accounts receivable increases.
• D) A gain is recognized.
• E) There is no effect to the income statement.

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Definitions:

Capital Gain Yield

The appreciation in the price of an investment, expressed as a percentage of the initial investment cost.

Total Rate Of Return

The overall return on an investment, including both capital gains and income, expressed as a percentage of the initial investment.

Capital Gain Yield

The increase in the price of an investment, calculated as the percentage difference between the current price and the purchase price.

Rate Of Total Return

A measure of the overall return on an investment, including both capital gains and income, expressed as a percentage of the initial investment.