Under the Allowance Method, When a Receivable That Had Been

question 115

Multiple Choice

Under the allowance method, when a receivable that had been previously written off is collected:

• A) Profit is increased.
• B) Net assets are increased.
• C) Profit and net assets are not affected.
• D) Net assets and profit are both increased.

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Definitions:

Demand Schedule

A table that shows the quantity of a good or service that consumers are willing to buy at each price point.

Marginal Cost

The incremental expense incurred from the production of an extra unit of a good or service.

Maximum Profit

The highest possible financial gain achievable by a firm from its operations, over a certain period of time.

Demand Schedule

A chart displaying the amount of a product or service that buyers are prepared and capable of buying at different price levels.