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:

Monthly Profit

The net income earned by a business or individual during a one-month period, calculated by subtracting total expenses from total revenue.

Inequality

A mathematical or social science statement indicating that two values or conditions are not equal in terms of size, magnitude, or importance.

Constraint Function

A mathematical expression that employs variables and constants to define limitations or conditions on the optimization of an objective.

Right-Hand Side

The section or part of an equation that appears to the right of the equals sign (=).