When a Firm Uses the Allowance Method to Provide for Losses

question 65

Multiple Choice

When a firm uses the allowance method to provide for losses for uncollectible accounts,the collection of an account previously written off as uncollectible requires an entry to

• A) reinstate the account receivable.
• B) increase the balance of the Sales account.
• C) reduce the balance of Uncollectible Accounts Expense.
• D) decrease the balance of the Allowance for Doubtful Accounts.

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Definitions:

Investing Activity

Transactions involving the purchase or sale of long-term assets and investments, a section in the cash flow statement.

Supplies

Items used in the operation of a business but not directly tied to the production of goods or services, such as office supplies.

Balance Sheet

A financial statement that displays a company's financial position, showing assets, liabilities, and equity as of a specific date.

Accounting Equation

The accounting equation is the foundational principle of double-entry bookkeeping, expressed as Assets = Liabilities + Owner's Equity, balancing a company's financial statements.