The Direct Write-Off Method of Recognizing Uncollectible Accounts Expense

question 75

Multiple Choice

The direct write-off method of recognizing uncollectible accounts expense:

• A)Is acceptable only when most of the company's sales are on credit.
• B)Records uncollectible accounts expense when individual accounts receivable are determined to be worthless.
• C)Records uncollectible accounts expense when customers exceed their credit limits.
• D)Uses a valuation account to record specific customer accounts deemed uncollectible.

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Definitions:

Actuaries

Professionals who assess the financial impact of risk and uncertainty, utilizing mathematics, statistics, and financial theory to study uncertain future events, especially in the insurance and finance fields.

Unrecognized Prior Service Cost

Costs related to pension plan benefits earned in previous periods but not recognized at that time, due to changes in plan terms or estimations.

Years-of-Future-Service Method

The Years-of-Future-Service Method is a technique used in accounting to calculate pension or retirement benefits, based on the projected years of service of an employee.

Defined Benefit Pension Plan

A retirement plan where the employer guarantees a specific retirement benefit amount for the employee based on factors such as salary history and length of employment.