Matsuzaka Company Uses the Allowance Method to Account for Uncollectible

question 110

Multiple Choice

Matsuzaka Company uses the allowance method to account for uncollectible accounts. An account that had been previously written-off as uncollectible was recovered. How would the recovery affect the company's accounting equation?

• A) Increase assets and increase equity.
• B) Increase assets and decrease liabilities.
• C) Reduce liabilities and increase equity.
• D) Have no effect on assets, liabilities, or equity.

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Definitions:

Preferences

The subjective tastes and desires of consumers that influence their choices among various goods and services.

Apples

In economic and financial contexts, this term is often used metaphorically to represent the comparison of similar items or investments, as in "comparing apples to apples."

Oranges

A citrus fruit characterized by a round shape and a sweet, juicy pulp, commonly consumed fresh or used in beverages.

Indifference Curve

A graph that shows a combination of two goods that give a consumer equal satisfaction and utility, thereby indicating the consumer's preferences.