With Respect to the Write-Off of an Uncollectible Account Receivable

question 50

Multiple Choice

With respect to the write-off of an uncollectible account receivable against the allowance for bad debts, a sound system of internal control would require:

• A) the write-off be approved by two employees.
• B) an investigation of why credit was extended to this customer in the first place.
• C) a lawsuit to be initiated to recover the uncollectible amount.
• D)the write-off to be made within six months after the date of sale.

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Definitions:

Post Hoc

Short for post hoc ergo propter hoc, a logical fallacy implying that since one event follows another, the first event must be the cause of the second.

Fallacy

A deceptive, misleading, or false notion or argument, often used in the context of logical reasoning or debate.

Occurred

An event or action that took place or happened, usually at a specific time and place.

False Alternative

A logical fallacy that presents a limited set of options when, in fact, more options exist.