Which Is Not One of the Three Elements of Control

question 3

Multiple Choice

Which is not one of the three elements of control?

• A)the ability to use power over the investee to affect the amount of the investor's returns;
• B)holding majority voting rights;
• C)power over the investee;
• D)exposure,or rights,to variable returns from involvement with the investee.

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Definitions:

Direct Write-off

A method of accounting for bad debts where uncollectible accounts receivable are directly written off against income at the time they are deemed uncollectible.

Bad Debts Recovered

When an account receivable has been written off and is recovered, this account, which is in the Other Revenue category, is credited in the direct write-off method if the recovery is in a year following the write-off.

Allowance for Doubtful Accounts

A contra asset account that estimates the portion of receivables that may not be collectible, affecting a company’s net income and assets.

Bad Debts Expense

An expense reported on the income statement, representing the estimated irrecoverable amounts from customers who can no longer pay their obligations.