The Statement Concerning the Allowance for Doubtful Debts Account That

question 21

Multiple Choice

The statement concerning the Allowance for Doubtful Debts account that is not true is:

• A)Allowance for Doubtful Debts is used to adjust receivables for estimated bad debts because individual debtor's balances cannot be removed from the ledger unless there is indisputable evidence they are bad
• B)Allowance for Doubtful Debts is a contra-asset account designed to reduce receivables to estimated realisable value
• C)Allowance for Doubtful Debts represents cash set aside to cover losses incurred as a consequence of customers being declared bankrupt
• D)Allowance for Doubtful normally has a credit balance

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Definitions:

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A systematic examination or assessment of something with the possibility or intention of instituting change if necessary.

Experience of Flow

A mental state of deep focus and immersion in an activity, where time seems to pass unnoticed, and performance is at its peak.

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Outcomes or repercussions of actions that affect parties outside the individual or entity responsible for the actions.

Organizational Creativity

The capacity of a company or organization to generate novel and useful ideas and solutions.