If a Company Uses a Percentage of Net Sales in Computing

question 15

Multiple Choice

If a company uses a percentage of net sales in computing the amount of uncollectible accounts expense:

• A)No valuation allowance will be required.
• B)The relationship between revenue and expenses is being stressed more than the valuation of receivables at the balance sheet date.
• C)The existing balance in the Allowance for Doubtful Accounts will be increased sufficiently to equal the probable loss indicated by the percentage of net sales computation.
• D)Any past-due accounts will be listed as a separate item in the balance sheet.

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Definitions:

Acceptance

The act of receiving or taking something offered.

Psychological Adjustment

The process of balancing and adapting one's personal or psychological aspects to the demands or needs of social and environmental contexts.

Congruent

In psychology, referring to consistency and alignment between an individual's self-perception and actual experiences or behaviors.

Environment

The surrounding conditions, influences, or forces which affect the life, behavior, or development of an organism or community.