Which of the Following Is True About a Credit Balance

question 13

Multiple Choice

Which of the following is true about a credit balance in Allowance for Doubtful Accounts at the end of a year?

• A) More accounts receivable were actually written off as uncollectible during the year than estimated previously.
• B) Bad debts expense in the period was overstated and net income was understated.
• C) Bad debts expense in the period was understated and net income was overstated.
• D) Accounts receivable estimated as uncollectible is equal to the bad debts expense written off during the year.

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Definitions:

Completion of Sale

This term signifies the point at which a transaction is finalized, and all conditions for the sale have been satisfied, transferring ownership from seller to buyer.

Equity

The amount of ownership interest in an asset or business, after deducting all debts associated with that asset.