In Relation to the Direct Write-Off Method of Accounting for Bad

question 22

Multiple Choice

In relation to the direct write-off method of accounting for bad debts,it is not true that:

• A)Bad debts are charged as an expense at the time an account is determined to be uncollectable
• B)The entry to write off bad debts is debit Bad Debts Expense,debit GST collected,credit Accounts Receivable
• C)There is no contra asset account for estimated doubtful debts
• D)Bad debts expense is recorded in the same period in which its related sales revenue is included as income

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Definitions:

Financial System

An intricate network of financial institutions, markets, and instruments that facilitate the exchange of funds and allocation of resources in an economy.

Business Investors

Individuals or entities that allocate capital with the expectation of receiving financial returns, typically into companies or projects.

Debt Financing

The method of raising capital through the sale of bonds, bills, or notes to individuals or institutional investors which must be repaid at a later date.

Equity Financing

The process of raising capital through the sale of shares in a company.