The Rosenblum Case Ruling Was of Concern to the Accounting

question 21

Multiple Choice

The Rosenblum case ruling was of concern to the accounting profession because it implied that

• A) Full joint and several liability would be reinstated
• B) All possible third party users of financial statements must be anticipated
• C) The concept of contractual privity would no longer be important
• D) Financial liability would occur when scienter was a factor

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Definitions:

Bad Debt Expense

An accounting term representing the amount of revenue considered uncollectible from credit sales.

Allowance for Doubtful Accounts

A contra-asset account that reduces the total receivables balance to reflect the amount that is expected to be uncollectible.

Allowance for Doubtful Accounts

The allowance for doubtful accounts is an accounting technique to estimate the amount of receivables that are expected not to be collected, acting as a contra account to accounts receivable.

Bad Debt Expense

An expense reported on the income statement, representing the estimated amount of credit sales that are not expected to be collected due to customer default.