Securitization Is the Process of Slicing Up and Bundling Groups

question 91

True/False

Securitization is the process of slicing up and bundling groups of loans, mortgages, corporate bonds and other financial debts into distinct new securities.

---

Definitions:

Uncollectible Accounts

Uncollectible accounts are debts owed to a company that are considered uncollectable and are written off as a bad debt expense.

Allowance for Doubtful Accounts

A contra account that represents the estimated amount of accounts receivable which may not be collectible.

Adjusting Entry

An accounting record made to adjust revenues and expenses to match the accounting period they were incurred, ensuring compliance with the accrual basis of accounting.

Allowance Method

An accounting technique used to estimate uncollectible accounts receivable, acknowledging potential losses on credit sales.