Which of the Following Statements Concerning the Estimation of Bad

question 80

Multiple Choice

Which of the following statements concerning the estimation of bad debt expense by using a percentage of credit sales is incorrect?

• A) Produces the same results, as an aging of accounts receivable.
• B) Causes an adjustment to the allowance account without regard to the balance in that account immediately prior to the adjustment.
• C) Is based primarily on the matching principle.
• D) Emphasizes the income statement.
• E) Only incidentally measures accounts receivable at net realizable value.

Grasp the notion of marginal analysis and how it is applied to make decisions.

Recognize the role of scarcity in economics and how it necessitates choices.

Apply the economic perspective to analyze individual and societal choices.

Discern the difference between rational and irrational behavior in the context of economics.

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Definitions:

Statement of Cash Flows

A financial report that provides aggregate data regarding all cash inflows and outflows a company receives from its ongoing operations, investment, and financial activities.

ASPE

Accounting Standards for Private Enterprises; a set of accounting standards for private companies in Canada, designed to meet the needs of private entities.

Comparative Statement of Income

A financial statement presenting a company's revenues, expenses, and profits over multiple periods for comparison purposes.

Cash Basis

An accounting method where revenues and expenses are recognized only when cash is actually received or paid out, as opposed to when they are incurred.