Shupe IncEstimates Uncollectible Accounts Based on the Percentage of Accounts Receivable

question 161

Multiple Choice

Shupe Inc.estimates uncollectible accounts based on the percentage of accounts receivable.What effect will recording the estimate of uncollectible accounts have on the accounting equation?

• A)Increase liabilities and decrease stockholders' equity.
• B)Decrease assets and decrease liabilities.
• C)Decrease assets and decrease stockholders' equity.
• D)Increase assets and decrease stockholders' equity.

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Definitions:

Interest Rate

The fraction of a quantity of money levied for borrowing it, often shown as a yearly percentage rate.

Investment

The act of allocating resources, usually money, in the expectation of generating an income or profit.

Government Bonds

Debt securities issued by a government to support government spending and obligations.

Mutual Funds

Investment programs funded by shareholders that trade in diversified holdings and are professionally managed.